Question 1

Invoicing Once despatched, a copy of the GDN is sent to the accounts team at head office and a sequentially numbered sales invoice is raised from the GDN. Periodically a computer sequence check is performed for any missing sales invoice numbers.

When the invoice is sent to the customer, the system GDN is marked as invoiced. A system report is reviewed by the senior accountant on a fortnightly basis for any GDNs that have not been invoiced.

The system generates customer invoices using the company price list, which is updated quarterly. Discounts must be requested by a sales manager and authorised by the sales director to allow the accounts team to raise an invoice.

Required: Identify and explain the controls in Murray Co.s sales system and suggest how the auditor would test those controls.

Question 2

Invoicing On receipt of an invoice by the head office accounts team, the invoice is matched to and filed with the relevant GRN, using the purchase order number marked on the invoice (if there is no purchase order number marked on the invoice, this must be obtained from the supplier). The 3 invoice number is noted on the GRN grid-stamp. The invoice is also checked to the original purchase order to ensure the agreed prices and discounts have been honoured.

A monthly check of GRNs is made by the purchases ledger manager, to identify any GRNs for which no invoice has been received.

Required: Identify the controls in Murray Cos purchases system and suggest how the auditor would test those controls.