11.30 SUBSTANTIVE TESTING OF SALES COLO2 James is seeking your advice on the selection of substantive procedures for the audit of his client, Rock Ltd. Rock Ltd is a specialist outdoor clothing and equipment retailer and has experienced reasonable growth over the past three years, although this growth has come substantially from the clothing section. Sales of camping and climbing equipment are down significantly so far this year in all stores except Melbourne. Early results from audit testing show that controls over the sales process are reasonably effective, resulting in a low to moderate control risk. James believes he will need to do some substantive testing of sales, but is unsure about which procedures would be most useful. He has access to Rock Ltd's monthly sales budgets for the period and results for the eight months of the year to date. Required Write a memo to James explaining the substantive procedures for sales that he could choose from and which would be most useful in these circumstances. 11.32 ASSESSING THE RESULTS OF PAYROLL SUBSTANTIVE TESTING DOLO3, 4 The human resources department at Countrywide Logistics is responsible for selecting and appointing employees, approving pay rates and promotions, and processing employee terminations. The payroll department is responsible for preparing the weekly wages based on the information from the human resources department and according to hours worked by each employee. Countrywide Logistics has a number of long-term contracts to deliver goods along the eastern seaboard. The company operates a fleet of large trucks and has a number of permanent drivers who are assisted by other drivers on short-term contracts during busy times of the year (such as the three months prior to Christmas). Drivers work long shifts and most of the driving is done at night. During busy times the human resources department falls behind with processing paperwork related to the short- term contract drivers. In particular, there are constant complaints from the drivers that they have to wait several weeks after they start work for their first pay. John is testing the payroll process. He discovers that the complaints from the drivers are justified; it takes on average three weeks from the date the driver starts work for the relevant authorisation for the driver's pay to be received by the payroll department. However, he also finds that on average drivers are paid for one additional week after they actually leave the company because the human resources department does not record the termination date accurately. The payroll department tells John that, because of the confusion, no provision is made for accrued wages at year-end. Required (a) Based on John's findings, which accounts are likely to be misstated and which assertions are violated? (b) What tests would you recommend that John perform to substantiate weekly wages expense