Effective internal controls at the transaction level are designed to prevent or detect and correct material misstatements that could occur within the flow of transactions. In the case study assignment in Chapter 6, you were required to identify potential misstatements and affected assertions within the wholesale credit sales.

Answer the following questions based on the information presented for Cloud 9 in the appendix to this text and the earlier chapters. You should also consider your answers to the case study questions in earlier chapters.

Required

a. For each assertion related to wholesale credit sales, identify a key control in Cloud 9’s system of internal control.

b. For each key control identified in (a), explain how you would test the control.

c. For each control identified in (a), explain the evidence that would lead the auditor to believe that the there was a deviation from the prescribed control.