QUESTION 5

Below are stated two internal controls and the corresponding tests of the controls. Treating each pair separately, specify the starting point for the test of control and the information used for verification.

Internal Control A: Sales are processed only when the Credit Manager has performed a credit check. T he Credit Manager evidences h er performance of this internal control by signing the Sales Order.

Test of Control A: The auditor examined a sample of Sales Orders for evidence that they had been approved by the Credit Manager.

Internal Control B: Shipping Orders are prenumbered and periodically a Clerk account for a sequence. She evidences this by initialling the Shipping Order.

Test of Control B: The auditor examined a sequence of prenumbered Receiving Reports for evidence that the sequence had been reviewed by one the clients staff