L7- testing and system evaluation Flashcards
what stage are we looking at here?
Interim stage of the audit
internal control revenue system
goes through risk, control and test of controls for each stage e.g., ordering
internal control revenue system e.g., ordering
risk- customer cant afford to pay
control- seg of duties
test of control- independent credit checo on all new customers
internal control revenue system e.g., despatch/invoice
risk- not invoiced
control- prenumbered sheet
test of control- verify the sales to inventory records
what do you think are objectives of the sales and trade receivables system
did they get the goods at the advertised price
recorded sales are genuine, accurate and complete
all cash received is record in full before banking
control points of sales and trade receivables
identification
credit sale- supply banks reference
completeness- all boxes filled
how would you evaluate the sales and tr systems?
- the person that prepares sales of orders is independent of credit control, custody of inventory and recording sales transaction
- are sales numbers preordered
management letter
communicates with TCWG- ISA265 ( communicate bad things in internal control
*to obtain info relevant to audit
* provide timely obes arising from the audit
* promote effective communication
Management letter contains
title, intended recipients
if auditor has no reason to doubt integrity of officials
conclusion
* brief descr
* poss conseq
* recomm
circumstances with management letter
maybe not wise to discuss findings with management if integrity in question
what if business small and dont have enough staff
management letter- importance of supervision
other outcome of management letter
spot weakness that may result in misstatement in fs
no remedial action to take care of weakness- ask why?
