A. The segregation of duties regarding the collection of cash should be improved. Megan Rogers receives the cash receipts, creates a prelisting and bank deposit, deposits the cash. She seems to be the sole individual responsible for receiving and managing the cash until it is recorded by accounts receivable. This duty sho utilize two individuals. The incorporation of another individual will provide dual oversight of the cash collection procedures and warrant discrepancies or difference may arise to be dealt with and discussed. However, Megan Rogers does not have access to the accounts receivable ledger. Due to the fact that she can receive handle the cash, but not record the cash, the company may deem the activities Rogers performs as acceptable, because if she attempts fraud in her position it w discovered with other tests such as confirmations and reconciliations of the accounts receivables and inspection of customer orders, seles invoice, and deposit B. Paula Nicholson - her role with reviewing customer complaints and preparing sales invoices? Does it provide independence? tales Transactions (class of transactions during the period) Assertion IC Describe internal control strengths Test of Controls for Internal Substantive Tests How the Nature, Timing or E Evaluet Recommend a control if controls are Control Strengths Related to the Assertion of your planned substantive ion affected by controls Documente Strong Segregation of duties including receiving and -Walkthrough and observe proper -Vouch a sample of sales Juture: With strong internal control preparing customer orders, order input, and segregation of duties including the transactions recorded in the sales desection risk is moderate to high approving of credit. receiving and preparing of customer joume to the customer orders Welchroughs, observation, physics Prints and woes pre-numbered sales order. orders, the approving of credit, and the and shipping documents. automated inspection along with -Seles invoice is prepared from shipping shipping of goods and the completion of -Review cancellations of shipping substantive tests will be performed information, which requires an approved soles the shipping documents. documents for sales entered Timing: The tests of controls may order. Bills of leding are only produced for approved customers; sales are recorded only for Review and test procedures for malling multiple times conducted at the interim and year- and handing complaints regarding there are non-routine transactions c approved customer orders and from shipping mondly statements. changes in controls then more your documents from approved customers. -Review and test procedures for testing will be conducted -Monthly customer statements including accounting for numerical sequences of Extent Due to automated controls bulonces and activity we sent from AR and sales orders. inherentrisk is assumed but due to accounting manages complaints. Inspect, examine and sample sales importance of the controls there will -Report to compare number of items shipped to number of items billed. invoices for approved customer orders and shipping documents- bills of lading extensive testing to ensure operati effectiveness of the controls. Does not numericaly sequence sales invoices -Should like they do seles orders Completeness Strong -Prints pre-numbered seles orders. -Trace shipping documents to sales -Trece a sample of chipping Nature: The effectiveness of the co -Shipping information used to create sales nvoices and the seles journal. documents to the seles invoice wil blowfor less reliable and subst -Inquire of Brown of his handling of the and entry in the seles journal and evidence Tests of transactions wil -Brown queries and reconciles duly sales report. open-order file and procedure used to customers AR. conducted and can be conducted a -Open-order file with non-processed transactions liminute the openfile. of controls as well are reviewed within a day. Examine the open-order f e for unfiled Timings Tests will mainly be condo -Numbered bills of leding and sales invoices orders Interim dures and there wil be som -Testo a sample of the queried and daily additional year-and movesome ts. reconciliations. Extent With movessed opening -Review and tests the procedure for effectiveness of controls and low de accounting for numerical sequence of rick smaller sample sizes may be seles orders and shipping documents. substantive testing then if a high de risk due to ineffective controls. Authorization Strong -Hos Buthorized price lists and terms of trade for -Inspect and examine customer orders -Verity and compare prices and Nature: high detection riske conduct which price lists are reviewed and authorized terms on sales invoices to physical and computerized exuming monthly by CED. CFO, CDO and verified after for proper writen credit approval or disapproval from CFO. authorized price lists and trade and mining substantive test of
