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Gadra plc sells a variety of electrical equipment on a wholesale basis to some 1 , 5 0 0 credit customers. Cash sales are not
Gadra plc sells a variety of electrical equipment on a wholesale basis to some credit customers. Cash sales are not a feature of the business. Sales orders are received by
telephone and are recorded on a prenumbered order form in two parts. Part is sent to the customer as acknowledgement of the order. Part is used by the manager of the sales office
as an action copy. He authorizes the order after checking the account balance with the accounts department to ensure that the credit limit is not exceeded.
The order is then passed to the warehouse where the goods are picked and sent to dispatch. The order form is then passed to the invoice typing section in the sales office, and threepart
invoice sets are typed. Each set is numbered by reference to a number register, and the top copy is given to the customer with the goods at the collection point. The second copy is an
accounts copy and the third is filed in the customer file in the sales office. There are no other procedures in relation to sales order processing.
Required
Identify at least weaknesses and impacts of those weaknesses. marks
What audit procedures could be adopted to verify the recorded sales?
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