I am working on this scenario for an Audit assignment and could use help, please see below:

Required:

Using information from the scenario below, list 5 tests of control an auditor would normally carry out on the despatch and sales system at ABC Ltd and explain the reason for each test.

Scenario: You are an audit senior in a public accounting firm.You are current working on the audit of ABC Co, one of the firms clients, and you are preparing the audit program for the sales and collection cycle.

Audit documentation is available from the previous years audit, including internal control questionnaires and audit programmes for the despatch and sales system. As far as you are aware, ABCs system of internal control has not changed in the last year.

Client background sales system

ABC Co is a wholesaler of electrical goods such as kettles, televisions, MP3 players, etc. The company maintains one large warehouse in a major city. The customers of ABC are always owners of small retail shops, where electrical goods are sold to members of the public. ABC only sells to authorised customers; following appropriate credit checks, each customer is given an ANC Co identification card to confirm their status. The card must be used to obtain goods from the warehouse.

Despatch and sales system

The despatch and sales system operates as follows:

1. Customers visit ABCs warehouse and load the goods they require into their vans after showing their ABC identification card to the despatch staff.

2. A pre-numbered goods despatch note (GDN) is produced and signed by the customer and a member of ABCs despatch staff confirming goods taken.

3. One copy of the GDN is sent to the accounts department, the second copy is retained in the despatch department.

4. Accounts staff enter goods despatch information onto the computerised sales system. The GDN is signed.

5. The computer system produces the sales invoice, with reference to the stock master file for product details and prices, maintains the sales day book and also the debtors ledger. The debtors control account is balanced by the computer.

6. Invoices are printed out and sent to each customer in the post with paper copies maintained in the accounts department. Invoices are compared to GDNs by accounts staff and signed.

7. Paper copies of the receivables ledger control account and list of aged receivables are also available.

8. Error reports are produced showing breaks in the GDN sequence.