SUBJECT: AUDIT

Auto Legend Sdn Bhd (Auto Legend) had historically sold auto parts directly to customers through its retail stores. Due to competitive pressure. Auto Legend installed an Internet-based sales system that allows customers to place orders through the company's website. The company hired an outside website design consultant to create the sales system because the company's IT personnel lack the necessary experience.Customers use the link to the inventory parts listing on the website to view product descriptions and prices. The inventory parts listing is updated weekly. To get the system online quickly, management of Auto Legend decided not to link the order system to the sales and inventory accounting systems. Customers submit orders for products through the online system and provide credit card information for payment. Each day, accounting department clerks print submitted orders from the online system. After credit authorization is verified with the credit card agency, the accounting department clerks enter the sales into the sales journal. The accounting department clerks then send a Conv of the order to warehouse personnel. shipment to the customers. The inventory system is updated based on bills of lading information forwarded to accounting department after shipment. Gustomers may return parts for full refund if returned within 30 days of submitting the order online. The company agrees to refund shipping costs incurred by the customer for returned goods. a. Describe the deficiencies in Auto Legend's online sales system that may lead to material misstatements in the financial statements. Indicate the financial statements account(s) that may be affected due to the deficiencies described. Explain why the accounts indicated may be affected