WK 4 inter sales

Question 1

describe 5 controls an auditor would see in place in relation of accounts

Answer 1

1. seg of duties - diff people, person who makes transaction isnt same person who reconciles cash
2. auth and approvial- appropriate approval for credit sales, refunds. clearly documented, limtis
3. documentation and record- proper record of sales invoice, reciepts. help support their case - valid accrucy. laws and reg
4. reconcilation and review - regulatrly done ensure everything is done correct, sub ledgers with general ledgers. incosnsistency promptly investigated
5. monitoring and reporting mechansims- effective monitoring and repoirting- dectect any irregulaties and report. promt invest

Question 2

5 test around cash recievables that would be completed by an auditor

Answer 2

1. confirm account reviecables- audit send confirmation to cust to verify balance- completed accurately
2. test of cut off procedures- ensure recievables and expenses in right period - look at invoices for review.
3. repreform bank reconiclations.- verify cash bala in comp general ledger. compare comp record with bank statements - follow up
4. review credit and collection polcies- compliance with industry standard, adequate credit limits, proper proceudres to write off
5. subsrantive test- obtain direct evid of cash balancines, accarucy, complete. - bank satements

Question 3

5 assersttions with cash and tr

Answer 3

1. existence occurcee- verify balances actually exist and valid in fs-
2. accuracy and valuation- accurate and vauled in fs.- net relisable value, proper stated at actual amounts
3. completeness- all accounts recorded are included in fs- no omission
4. rights and obligations- see if legal rights to tr - any restriction
5. presnetation and dsclosure- cash receive and cash balances prop presented and disclosed in fs, nca, ca

Question 4

internal controls typical errors with tr and credit sales

Answer 4

recorded incorrectly
shipped by not billed
billed but not shipped
wrong accounting period

Question 5

e.g., can only approved customer be included sales ledger

Answer 5

sheridan no, because some dont pay with credit
credit customers have limits
account applications signed by accounts manager - yes harry, auth credit up to 1k ( potential conflict of interst as SM, motivated to increase sale)

Question 6

e.g., can order only be accpted for recongised customers with their credit limits

Answer 6

only accpeted for approved
aged debtor preped each month
chasing letters for balances outside payment terms- sales ledger, only for 90+ days

Question 7

do all goods desptached result in customer being invoiced

Answer 7

orders recored prenumber sakes order
gdn mathced with sales order
does customer sign for goods