audit homework
Question 11. 25
Your firm has been engaged to audit the financial statements of Haven Ltd. In obtaining an understanding of internal control relating to credit sales, the following questionnaire is used:
1 Does the company evaluate the customer’s credit history, and is amount of available credit checked before a sale is authorised?
Select a sample of credit order and inspect credit history and other supporting documents.
Review the policy/procedure for customer approval and setting of credit limits.
2 Is there adequate segregation of duties between authorising sales, shipping goods, and recording sales?
Observe and make inquiries about the performance of various functions and duties. 3. Does management compare all shipments with recorded sales to ensure that all sales are recorded?
Submit test data for a transaction that has shipping information, both with and without a supporting sales invoice.
Select a sample of sales invoices and examine for evidence that the company
compared details to shipping documents, purchase orders, and sales orders.
4. Is every recorded sale checked against shipping records for appropriateness of revenue recognition?
Submit test data where invoice data does not match with underlying shipping information.
5 Are there adequate controls over the accuracy of the sales invoice?
Select a sample of sales invoices and examine them.
6 Are there adequate controls to ensure that the sales invoices are recorded in the correct time period?
Select a number of sales invoices - compare date on sales invoice with date in sales ledger.
Perform sales cut‑off tests to obtain assurance that sales transactions and corresponding entries for inventories and cost of goods sold are recorded in the same and proper period.
The sales cutoff test involves:
Examining shipping documents for several days before and after the cutoff date to determine the date and terms of shipment.
Tracing shipping
Your firm has been engaged to audit the financial statements of Haven Ltd. In obtaining an understanding of internal control relating to credit sales, the following questionnaire is used:
1 Does the company evaluate the customer’s credit history, and is amount of available credit checked before a sale is authorised?
Select a sample of credit order and inspect credit history and other supporting documents.
Review the policy/procedure for customer approval and setting of credit limits.
2 Is there adequate segregation of duties between authorising sales, shipping goods, and recording sales?
Observe and make inquiries about the performance of various functions and duties. 3. Does management compare all shipments with recorded sales to ensure that all sales are recorded?
Submit test data for a transaction that has shipping information, both with and without a supporting sales invoice.
Select a sample of sales invoices and examine for evidence that the company
compared details to shipping documents, purchase orders, and sales orders.
4. Is every recorded sale checked against shipping records for appropriateness of revenue recognition?
Submit test data where invoice data does not match with underlying shipping information.
5 Are there adequate controls over the accuracy of the sales invoice?
Select a sample of sales invoices and examine them.
6 Are there adequate controls to ensure that the sales invoices are recorded in the correct time period?
Select a number of sales invoices - compare date on sales invoice with date in sales ledger.
Perform sales cut‑off tests to obtain assurance that sales transactions and corresponding entries for inventories and cost of goods sold are recorded in the same and proper period.
The sales cutoff test involves:
Examining shipping documents for several days before and after the cutoff date to determine the date and terms of shipment.
Tracing shipping