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  • Audit Exercise 11-37 11-40

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    meiwin manihing
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    1. The document lists possible errors and fraud in accounts receivable and appropriate controls to prevent them, such as requiring approved sales orders for goods released from the warehouse and comparing shipping documents to sales invoices. 2. It also lists audit procedures and classifies them as either substantive procedures, which obtain evidence about account balances, or tests of controls, which evaluate if controls are properly designed and operating effectively. 3. The audit procedures include confirmation of account balances with customers, analytical procedures comparing bad debts to prior years, and inspection of records like sales invoices to check for credit approval.

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    Chapter 11

    Original Title

    Audit Exercise 11-37; 11-40

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    1. The document lists possible errors and fraud in accounts receivable and appropriate controls to prevent them, such as requiring approved sales orders for goods released from the warehouse and comparing shipping documents to sales invoices. 2. It also lists audit procedures and classifies them as either substantive procedures, which obtain evidence about account balances, or tests of controls, which evaluate if controls are properly designed and operating effectively. 3. The audit procedures include confirmation of account balances with customers, analytical procedures comparing bad debts to prior years, and inspection of records like sales invoices to check for credit approval.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    11 views2 pages

    Audit Exercise 11-37 11-40

    Uploaded by

    meiwin manihing
    1. The document lists possible errors and fraud in accounts receivable and appropriate controls to prevent them, such as requiring approved sales orders for goods released from the warehouse and comparing shipping documents to sales invoices. 2. It also lists audit procedures and classifies them as either substantive procedures, which obtain evidence about account balances, or tests of controls, which evaluate if controls are properly designed and operating effectively. 3. The audit procedures include confirmation of account balances with customers, analytical procedures comparing bad debts to prior years, and inspection of records like sales invoices to check for credit approval.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Name: Mamesah, Hillary; Manihing, Meiwin; Metekohy, Geraldine

    Exercise 11-40 & 11-37


    Exercise 11-40
    Possible Errors and Fraud Controls
    a. Invoices for goods sold are posted to C. Monthly statements are mailed to all
    incorrect customer accounts customers with outstanding balances
    b. Goods ordered by customers are G. Shipping documents are compared with
    shipped, but are not billed to anyone sales invoices when goods are shipped
    c. Invoices are sent for shipped goods, F. Daily sales summaries are compared
    but are not recorded in the sales with controls totals of invoices
    journal
    d. Invoices are sent for shipped goods K. Control amounts posted to the accounts
    and are recorded in the sales journal, receivable ledger are compared with
    but are not posted to any customer control totals of invoices
    account
    e. Credit sales are made to individuals I. Customer orders are compared with an
    with unsatisfactory credit ratings approved customer list
    f. Goods are removed from inventory B. Approved sales orders are required for
    for unauthorized orders goods to be released from the warehouse
    g. Goods shipped to customers do not D. Shipping clerks compare goods received
    agree with goods ordered by from the warehouse with approved sales
    customer orders
    h. Invoices are sent to allies in a L. Sales invoices are compared with
    fraudulent scheme and sales are shipping documents and approved
    recorded for fictitious transactions customer orders before invoices are
    mailed
    i. Customers’ checks are received for P. Total amounts posted to the accounts
    less than the customers’ full account receivable ledger from remittance
    balances, but the customers’ full advices are compared with the validated
    account balances are credited bank deposit slip
    j. Customers’ checks are C. Monthly statements are mailed to all
    misappropriated before being customers with outstanding balances
    forwarded to the cashier for deposit
    k. Customers’ checks are credited to A. Shipping clerks compare goods received
    incorrect customer accounts from the warehouse with the details on
    the shipping documents
    l. Different customer accounts are P. Total amounts posted to the accounts
    each credited for the same cash receivable ledger from remittance
    receipt advices are compared with the validated
    bank deposit slip
    m. Customers’ checks are properly S. An employee, other than the bookkeeper,
    credited to customer accounts and periodically prepares a bank
    are properly deposited, but errors are reconciliation
    made in recording receipts in the
    cash receipts journal
    n. Customers’ checks are P. Total amounts posted to the accounts
    misappropriated after being receivable ledger from remittance
    forwarded to the cashier for deposit advices are compared with the validated
    bank deposit slip
    o. Invalid transactions granting credit N. Goods returned for credit are approved
    for sales returns are recorded by the supervisor of the sales department
    Name: Mamesah, Hillary; Manihing, Meiwin; Metekohy, Geraldine
    Exercise 11-40 & 11-37
    Exercise 11-37
    Procedure Audit Classification of Audit Procedure
    Procedure
    a. Requested responses directly from Confirmation Substantive procedures
    customers as to amounts due
    b. Compared total bad debts this year Analytical Substantive procedures
    with the totals for the previous two procedure
    years
    c. Questioned management about Inquiry Substantive procedures
    likely total uncollectible accounts
    d. Watched the accounting clerk record Observation Test of controls
    the daily deposit of cash receipts
    e. Examined invoice to obtain evidence Inspection of Substantive procedure
    in support of the ending recorded records or
    balance of a customer documents
    f. Compared a sample of sales invoices Re- Test of controls
    to credit files to determine whether performance
    the customers were on the approved
    customer list
    g. Examined a sample of sales invoices Inspection of Test of controls
    to see if they were initialized by the records or
    credit manager indicating credit documents
    approval

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