Required:

The controls listed below relate to a system for processing sales transactions. Each numbered item indicates an error or irregularity that could occur and specifies a control procedure that could prevent or detect it. Identify the control objective satisfied by the auditee's control procedure. Write the test of controls audit program by specifying an effective control test to produce evidence about the auditee's performance of the control procedure. Hint:A control test is a two-part statement consisting of (1) identification of a data population from which a sample can be drawn and (2) expression of an action to take.

2. The company considers sales transactions complete when shipment is made. The control procedures are as follows. Shipping department personnel prepare prenumbered shipping documents in duplicate (sending one copy to the customer and filing the other copy in numerical order in the shipping department file). The shipping clerk marks up copy 3 of the invoice, indicating the quantity shipped, the date, and the shipping document number, and sends it to the billing department, where it is taken as authorization to complete the sales recording. Copy 3 is then filed in a daily batch in the billing department. These procedures are designed to prevent the recording of sales (i) for which no shipment is made or (ii) before the date of shipment.