I need to formulate the tests of controls that I would perform to test the manual and automated internal controls in the company's revenue and receipts cycle. (If you make use of audit procedures using test data to test the automated controls, limit your answer to invalid test data)

(18 marks)

Relevant Info:

Client: Cellular (Pty) Ltd Year-end: 31 March 2021 Prepared by: TR Ainee

Preparation date: 4 April 2021 Reviewed by: MAN Ager Review date: 6 April 2021 Subject: Revenue & Receipts Cycle

Thefollowing information relates to Cellular's order anddelivery function in the revenue and receipt cycle:

Cellular's order department is responsible for receiving and initiating orders. The department consists of one order manager and three order clerks. Three warehouse clerks and two despatch clerks are employed at Cellular's warehouse in Bedfordview. In order to prevent theft and ensure timeous delivery to its customers, Cellular's high-value inventory items at the warehouse are protected by one of the best high-tech security systems in the world.Cellular's security department tests and maintains the security system on a regular basis and makes test reports available on a weekly basis.

All sales are made on credit. Orders from existing and new customers are received telephonically or by e-mail. Each order is immediately captured on a pre-existing electronic internal sales order (ISO) by one of the order clerks. Cellular uses a real-time electronic ordering system that the order clerks can access by clicking on the order software icon on their personal computers. The order clerk is required to complete all the required fields of the ISO. The ordering system checks that all the required fields have been captured and comply with the automated pre-existing computer checks. If not, an error message appears on the computer screen which encourages the order clerk to capture the information correctly and completely. The real-time ordering system automatically checks availability of inventory before the order can be placed by the order clerk. After completing the ISO, the order clerk prints it to a printer where a pin code is entered to extract the printouts. The ISO is printed in three-fold and sent to the order manager who authorises the ISO by signing it. One copy of the authorised ISO is filed in the order department and the other two copies are sent to the warehouse and accounting departments. For each order received by e-mail, a copy of the e- mail is printed and filed with the ISO. Conversations of orders placed telephonically are recorded and may be referred back to if a customer is dissatisfied that an incorrect order has been filled.

A warehouse clerk uses the ISO as a picking slip to select the inventory in the warehouse for delivery to the customer. Before sending the inventory to the despatch area, the warehouse clerk checks the physical inventory against the ISO and prepares a sequenced delivery note accordingly. The warehouse clerk then sends the inventory together with all the documentation to the despatch area. A final check of the inventory is performed by the despatch clerk who also matches the physical inventory to the ISO and delivery note. Finally, the despatch clerk confirms that the address on the inventory package is the same as on the ISO and prepares a list of deliveries to be made.

All inventory is despatched by Cellular directly to its customers. Once customers receive the inventory, they sign a copy of the delivery note in two-fold. One copy of the signed delivery note is kept by the customer, and the other copy is sent to the order department. One of the order clerks in the order department files each signed delivery note with the ISO. Each ISO that is not accompanied by a delivery note is kept in a temporary file and followed up by the order clerk.

An automatic back-up of the order software program is made daily and is stored to a separate server stored onsite.