Question 2 10 Marks

For the following internal controls in the sales and collection cycle, identify the relevant transaction-related audit objective (e.g. occurrence, completeness).

(10 marks)

#	Control	Transaction-related audit objective
1	To input a customer order, the sales clerk first inputs the customer number. The system doesnt allow input of an order for a non-existent customer.
2	The system automatically prices products and calculates totals and GST on invoices.
3	The system posts individual sales transactions to the Accounts Receivable master file and the General Ledger Control Account.
4	The system generates numbered shipping documents for customer orders. On delivery to customers, the shipping record is updated and the corresponding invoice is generated. The system produces a report of shipments that have not yet been invoiced.
5	Access controls limit which staff can maintain customer master records and enter customer orders, cash receipts and bad debt writeoffs.
6	A report is produced by the system for changes to product prices. This is reviewed by an independent person to check on correct pricing.
7	Each customer is given a customer number indicating whether it is a retail or wholesale customer. This determines whether the sale is recorded as a retail sale or wholesale sale in the General Ledger.
8	The system generates a daily report of customer orders not yet shipped to customers. Staff investigate these to ensure that shipment occurs promptly.