Possible errors and frauds Internal control activities 1. Invoices for goods sold are posted to incorrect customer accounts. 2. Goods ordered by customers are shipped but are not billed to anyone. 3. Invoices are sent for shipped goods but are not recorded in the sales journal. 4. Invoices are sent for shipped goods and are recorded in the sales journal but are not posted to any customer account. 5. Credit sales are made to individuals with unsatisfactory credit ratings. 6. Goods are removed from inventory for unauthorized orders. 7. Goods shipped to customers do not agree with goods ordered by customers. 8. Invoices are sent to allies in a fraudulent scheme, and sales are recorded for fictitious transactions where no shipment has been made. O Shipping clerks compare goods received from the warehouse with the details on the shipping documents. O Monthly statements are mailed to all customers with outstanding balances. O Shipping clerks compare goods received from the warehouse with approved sales orders. Validated deposit slips are compared with the cashier's daily cash summaries. O Customer orders are compared with the inventory master file to determine whether items ordered are in stock. O The accounts receivable ledger is periodically reconciled with the general ledger accounts receivable account. O Daily sales summaries are compared with control totals of invoices. Total amounts posted to the accounts receivable ledger from remittance advices are compared with the validated bank deposit slip. O Sales invoices are compared with the master price file. O Customer orders are compared with an approved customer list. Sales orders are prepared for each customer order. O Control amounts posted to the accounts receivable ledger are compared with control totals of invoices. O Sales invoices are compared with shipping documents and approved customer orders before invoices are mailed. O Prenumbered credit memos are used for granting credit for goods returned. O Goods returned for credit are approved by the supervisor of the Sales Department. Remittance advices are separated from the checks in the mail room and forwarded to the Accounting Department O Shipping documents are matched with sales invoices when goods are shipped. The cashier examines each check for proper endorsement. An employee other than the bookkeeper periodically prepares a bank reconciliation. O Approved sales orders are required for goods to be released from the warehouse. O An employee other than the bookkeeper periodically prepares a bank reconciliation. O Approved sales orders are required for goods to be released from the warehouse. O Sales returns are approved by the same employee who issues receiving reports evidencing actual return of goods