internal control of its sales
Q: An auditor discovered the following errors and irregularities while performing tests of controls:…
A: SOLUTION INTERNAL CONTROL ARE THE RULES AND PROCEDURES IMPLEMENTED BY A COMPANY TO ENSURE THE…
Q: Which of the following test controls most likely would help assure an auditor that goods shipped are…
A: In order to test the effectiveness of the control so as to detect the material misstatement, an…
Q: An auditor discovered the following errors and irregularities while performing tests of controls:…
A: Auditor: An auditor is a person or a group of people who is responsible for conducting an audit of…
Q: . Inflated sales and bill-and-hold transactions. b.Bill-and-hold transactions and embezzlement of…
A: A Fraud Triangle is a framework that clearly indicates the motivation for an individual to commit…
Q: For each of the following potential misstatements, provide one potential audit test that could be…
A: Audit: Audit is the process of verification of the compliance of the financial statements. It…
Q: Which of the following is a control objective over sales? a. None of the options b. Compare goods…
A: Control Objective:- These are the statements in which it has been stated that how risk is going to…
Q: Which of the following audit procedures is a dual-purpose test, which tests the effectiveness of…
A: A dual-purpose test is an audit method that serves as a control and substantive test at the same…
Q: When auditing inventories, an auditor would least likely verify thata. All inventory owned by the…
A: Answer: Option a
Q: Assume that the auditors find serious weaknesses in the internal control of Oak Canyon, Inc., a…
A: Internal controls: These are the rules, mechanisms and procedures which are being implemented by an…
Q: The following internal controls were identified by the auditor while gaining an understanding of…
A: Internal Controls: These are controls implemented by the management to oversee the business…
Q: An audit report contains the following observations: a. A service department's location is not…
A: Audit- It refers to an independent examination of an organization's books of accounts, typically by…
Q: According to your understanding as a financial auditor, can these conditions lead to material…
A: The material misstatements is the mismatch of the accounts balances and there are things which are…
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A: The simple meaning of word Audit is 'doing inspection or examination' and the process of audit is…
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A: Accounts Receivables are those accounts of customers to whom business has made credit sales on…
Q: When an audit team traces a sample of shipping documents to the related sales invoice copies, they…
A: Accounts Receivables: Accounts receivables are those accounts that occur due to incomes for which…
Q: Payable ICQ Items: Assertions, Tests of Controls, and Possible Errors or Frauds. Following is a…
A: Management Assertion: Management assertion refers to the claim made by the management assuring about…
Q: Which of the following is incorrect related to the purchasing and cash disbursement cycle? Group…
A: Purchasing and cash disbursement cycle is a combination of activities related to business for…
Q: Examples of Deviations. Madison Perry, CPA, is conducting an audit of Parker Inc. In sodoing, Perry…
A: Requirement a:
Q: The following audit procedures are consistent with gathering evidence about the valuation assertion…
A: Accounts receivables are those accounts to whom business has made credit sales on account and amount…
Q: An internal control questionnaire indicates that an approved receiving report is required to…
A: Solution: An internal control questionnaire indicates that an approved receiving report is required…
Q: In response to the six primary physical control weaknesses that have been identified, make…
A: Physical control weaknesses: It is the failure in the implementation or effectiveness of physical…
Q: Which of the following procedures is usually performed by the auditor to determine if obsolete…
A: Obsolete inventory is an inventory that gets obsolete and remains unserviceable and loses its…
Q: Which of the following manipulations would understate accounts payable on the financial statements?…
A: Account payable means the amount owed by business to outsider for the goods received and services…
Q: ou have just been engaged as the auditor for Asempa Company Ltd. During your first audit as the…
A: Internal control : To prevent fraud and misrepresentation of financial statements, the…
Q: Which of the following is a test of control relating to purchases? a. None of the options b. Give…
A: Test of controls refers to the audit procedure followed by the auditors while conducting an audit of…
Q: Which, if any, of the following situations represent improper segregation of functions?a. The…
A:
Q: What is the primary purpose of analytical procedures performed during the planning stages of the…
A: Solution: Analytical Procedures refers to the evaluation of financial information via identifying…
Q: Which of the following is a control objective over sales? a. Only invoice customer for goods that…
A: Business means the professional or economic activity organized and controlled by an individual or by…
Q: The following are commonly performed tests of controls and substantive tests of transactions audit…
A: Audit procedures are steps taken by auditors to obtain all information regarding the quality of the…
Q: Assume that the auditors find serious weaknesses in the internal control of Oak Canyon, Inc., a…
A: Accounting records are invoices, vouchers, books, and statements that are used for recording and…
Q: nvoices, and the AR department posts to the customers’ accounts. B The sales department approves…
A:
Q: Which of the following audit procedures represent a substantive test of transaction that would…
A: Substantive test of transaction is the checking of the transaction with the supporting documents at…
Q: When auditing Vandalay Jewelry, Costanza, CPA, was not familiar with the quality and cutof the…
A: Audit Report: The written opinion of auditor about the company's financial statements is called…
Q: Which of the following best represents a key control for ensuring sales are properlyauthorized when…
A:
Q: Which of the following tests of details most likely would help an auditor determine whether accounts…
A:
Q: Which of the following procedures would best prevent or detect the theft of valuable items from an…
A: Definition:
Q: At the completion of an inventory observation, the controllerrequested the auditor to give him a…
A: Given case is: At the completion of an inventory observation, the controller requested the auditor…
Q: As part of your audit of a client’s inventory balance, you created an expectation of what should be…
A: SOLUTION- IF THE ESTIMATES MADE BY THE AUDITORS GIVES CONFUSING INVENTORY BALANCE , THE AUDITOR…
Q: Before the physical examination, the auditor obtains a copy of theclient’s inventory instructions…
A: Auditing: Auditing refers to an independent examination of financial information of any…
Q: Which of the following audit findings would be considered a deficiency in internal controls in the…
A: Deficiency in the internal control generally monitored by the internal auditors. Every transactions…
Q: Which of the following audit procedures would an auditor most likely perform to test controls…
A: An auditor must check the shipping documents that have not been recorded in sale journal to conform…
Q: In the expenditure cycle, the control procedure of comparing inwards goods documents to vendor…
A: Solution : Correct answer are -failure to take advantage of discounts for prompt…
Q: Sales orders are written by sales people who have no access to the goods, which are released by…
A: Delegation of authority: It is the organizational process of allocation of tasks to subordinates…
Q: As the auditor of Sample Limited you note the following matters relating to the internal control of…
A: Internal control is a system of organizing the company in which a set of rules, policies, and…
Q: Choose the one correct answer. Which of the following Test of Controls is done to examine whether…
A: Auditing means the independent checking of company operation by outsider. Auditor is qualified and…
Q: As a result of management's refusal to permit the auditor to physically examine inventory,…
A: When auditor is restricted from obtaining sufficient audit evidences in relation to any item of…
Q: An auditor discovered the following errors and irregularities while performing tests of controls:…
A: 1. An effective internal control system for inventory will include all procedures and actions that…
As the auditor of Sample Limited you note the following matters relating to the internal control of its sales system.
i) The sales department accepts order without first checking the inventory level with the warchouse,
ii) Goods are dispatched to customers without recording customer's signatures as proof of receipt of goods.
iii) Orders of goods placed by customers are properly recorded but they are not forwarded timely to the dispatch department for fulfilling the order.
For each of the above deficiencies, identify the possible impact on the company's operation and recommend a control to address it.
Explain why an auditor cannot perform only test of control in an audit.
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- Question 2 As the auditor of Sample Limited you note the following matters relating to the internal control of its sales system. i) The sales department accepts order without first checking the inventory level with the warehouse. ii) Goods are dispatched to customers without recording customer's signatures as proof of receipt of goods. iii) Orders of goods placed by customers are properly recorded but they are not forwarded timely to the dispatch department for fulfilling the order. a) For each of the above deficiencies, identify the possible impact on the company's operation and recommend a control to address it. b) Explain why an auditor cannot perform only test of control in an audit.As the auditor of Sample Limited you note the following matters relating to the internal control of its sales system. i) The sales department accepts order without first checking the inventory level with the warehouse. ii) Goods are dispatched to customers without recording customer's signatures as proof of receipt of goods. iii) Orders of goods placed by customers are properly recorded but they are not forwarded timely to the dispatch department for fulfilling the order. a) For each of the above deficiencies, identify the possible impact on the company's operation and recommend a control to address it. b) Explain why an auditor cannot perform only test of control in an audit.You will have the opportunity in this discussion to recommend adequate internal controls over sales invoices and receivables. If controls are not in place over these functions, companies are susceptible to errors, fraud, and losses. In the following scenarios, recommend internal controls that need to be in place to eliminate the problems described: An inexperienced clerk does not have the knowledge to prepare sales invoices properly. They are confused about the actual items shipped. As a result, the clerk has been preparing invoices at prices below the company's sales prices. During your audit, the controller approaches you about a problem with missing invoices. They think that these missing invoices were never recorded in the system, which results in the accompanying receivables not being recorded either. They read the monthly sales data and calculates that the company has faced significant losses as a result.
- An auditor is examining a nonpublic company’s inventory procurement system and has decided to perform tests of controls. Under which of the following conditions do GAAS require tests of controls be performed by an auditor?a. Significant weaknesses were found in the company’s internal control.b. The auditor hopes to reduce the amount of work to be done in assessing inherent risk.c. The auditor believes that testing the controls could lead to a reduction in overall audit time and cost.d. Tests of controls are always performed when the auditor begins to assess control risk.Payable ICQ Items: Assertions, Tests of Controls, and Possible Errors or Frauds. Following is a selection of items from internal control questionnaires.1. Are purchase orders above a certain level approved by an officer?2. Are the quantity and quality of goods received determined at the time of receipt by receiving personnel independent of the purchasing department?3. Are vendors’ invoices matched against purchase orders and receiving reports before a liability is recorded?4. Are journal entries authorized at appropriate levels?Required:For each preceding item:a. Identify the management assertion to which it applies.b. Specify one test of controls auditors could use to determine whether the control was operating effectively.c. Give an example of an error or fraud that could occur if the control were absent or ineffective.d. Write a substantive procedure that could find errors or frauds that could result from the absence or ineffectiveness of the control items."In order to determine whether internal control operated effectively to minimize errors of failure to invoice a shipment, the auditor would select from a sample of transactions from the population represented by the" Customer order file. Bill of lading file. Subsidiary-ledger Sales invoice file
- The following internal controls were identified by the auditor while gaining an understanding of internal control for the sales cycle. Access to the customer master file is restricted to authorized personnel. Customers are added to the master file only after appropriate approval, including adequate background and credit checks. Sales are made only to approved customers. The computer system rejects orders if the customer number is invalid or the order exceeds the customer’s approved credit limit. The computer matches the products and quantities on the customer order, shipping document, and sales invoice and generates an exception report of differences for follow-up in the accounting department. The computer generates a daily list of unmatched shipping documents. The sales clerk follows up on each exception and electronically signs the report when they are resolved. Invoice prices are obtained from the price master file. Any changes to the standard prices on an invoice must be…What internal control procedure(s) would provide protection against the following threats? a. Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.b. Posting the sales amount to the wrong customer account because a customer account number was incorrectly keyed into the system .c. Making a credit sale to a customer who is already four months behind in making payments on his account. d. Authorizing a credit memo for a sales return when the goods were never actually returned. e. Writing off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer. f. Billing customers for the quantity ordered when the quantity shipped was actually less due to back ordering of some items .g. Lost sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand. h. A sales clerk sold a $7,000 wide-screen TV…The company XYZ suffers from numerous weaknesses in its internal control system. For each the below situations, you are required to identify the anomaly/risk related to this system and propose eventual solutions. The financial department issues one copy of the sales bill that is shipped to the customer with the company The inventory custodian is the person who deliver the merchandise to the The person who keep the checks (issued and received) is the same who have access to the company accounting system. A has now 9 years experience in the company. He is responsible to keep cash and checks. Since he joining XYZ , he has not claim any vacation. The financial manager prepares the checks for the company suppliers and receive the merchandises ordered by the The company XYZ has recently installed an ERP system to manage all its activities . Different staff have access to this system. Mr X is working…
- 8) During the physical count of inventory of the retail grocery store one counter wrote down the wrong description of several products and miscounted the quantity. A control that could have prevented this error was A) adequate documents B) separation of duties C) independent verification D) proper authorization 9) In the previous problem, the Transaction Related Audit Objective affected by this error is A) occurrence B) completeness C) existence D) accuracyExamples of Deviations. Madison Perry, CPA, is conducting an audit of Parker Inc. In sodoing, Perry is performing a study of Parker’s internal control and has identified a numberof important controls related to purchases on which to rely. These controls are as follows:1. There is segregation of duties between the individual authorizing the purchase, the individual preparing the purchase order, and the individual receiving goods and servicesbeing purchased.2. Verification of approval of purchases is evidenced by having the individuals performingthe verification place their initials on the purchase order.3. On receipt of goods or services, invoices from vendors should be matched to purchaseorders. This matching is evidenced by a handwritten notation of the purchase order number on each invoice.4. Mathematical verification of vendor invoices should be evidenced by having the individuals performing the verification place their initials on the invoice itself.5. Payments should be made only…For each of the following potential misstatements, provide one potential audit test that could be used to detect the misstatement. sales included in the journals for which there was no shipment sale recorded more than once shipments made to nonexistent customers and recorded as sales
