The circumstances of City Finance in the opening story ofChapter 14illustrate an audit in which extensive reliance on internal controls in the sales and collection cycle will likely require the auditor to do extensive tests of controls and substantive tests of transactions.

Let's start the discussion by discussing this case. BestSellers.com sells fiction and nonfiction books and e-books to customers through the company's Web site.

Customers place orders for books via the Web site by providing their name, address, credit card number, and expiration date. What internal controls could BestSellers.com implement to ensure that shipments of books occur only for customers who have the ability to pay for those books? At what point will BestSellers.com be able to record the sale as revenue?

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