You have been assigned to perform tests of controls on the sales system at EDB Ltd. as part of the December 31, 2020, audit. EDB is a wholesaler of bathroom supplies such as vanity units, toilets, taps, and sinks. During testing, you noted the following errors:

1. Invoice no. 54922 issued on January 12, 2020, was entered twice. The error was discovered when the customer phoned to complain about being charged double the agreed amount.

2. Invoice no. 51839 issued on March 25, 2020, contained incorrect prices. Three vanity units were charged at $453 each instead of $543, and five sinks were charged at $231 each instead of $321. The error was discovered when the salesperson complained about not receiving the full commission for the month.

3. No prices were entered on invoice no. 56329 issued on April 24, 2020, resulting in a zero dollar invoice being issued. The error was discovered when accounts receivable staff noticed the zero amount appearing on the accounts receivable ledger.

4. Invoice no. 59328 issued on July 18, 2020, matched the customer’s order. However, the order was only partially fi lled because of a lack of inventory in the warehouse, meaning items that were never delivered were included in the invoice. The error was discovered when the customer phoned to complain about being overcharged.

5. Invoice no. 61348 issued on August 7, 2020, was sent to the wrong address. Apparently, the invoice had the correct address on it, but a typing error occurred on the envelope. The error was discovered when the customer phoned to complain about the overdue notice received, stating that the invoice had never been received in the fi rst place.

6. Invoice no. 62875 issued on November 29, 2020, was not processed through the usual channels. The details were correct but certain procedures, such as a formal credit check, were not documented. The invoice was a special order for a large building project and amounted to around 10 times the value of EDB’s average invoices. The sale was personally handled by one of the directors and the invoice was prepared by his assistant.

Required

Treating each of the listed errors independently:

a. Describe application controls (both manual and via the computer information system) that would have prevented or detected the error.

b. Describe further work you would perform in relation to each of the errors.

c. Explain the implications of the errors for your substantive testing of accounts receivable.