The following misstatements are found in the sales and collection cycle accounts:

several cash receipts have not been recorded in the accounts

a customer received a bill for items priced at last years (lower) rate

A shipment made (and payment agreed to) in the current financial year is recorded in the next financial years records.

A customer purchased goods and returned half of the goods on 30 June last financial year, but the return was recorded in the current financial year.

A small loan was made to a related party of the companys directors. The loan was recorded in Accounts Receivable until it was paid back

An industry boom has created an upsurge in the economy. The Allowance for Doubtful Debts was maintained at the same level as last year.

Several Accounts Receivables are in dispute because the delivery truck breakdown required shipments to be made in numerous small instalments. This made it difficult for customers and your company to track the orders.

REQUIRED:

For each misstatement(s) in each of the 7 observations above:

Identify the balance-related audit objective for each observation. (Please refer to the appropriate Management Assertion AND the Balance-related Audit Objective

List an Internal Control that should prevent each misstatement.

List one of the Test of Details of Balances type of audit procedure that an auditor could use to detect for each of the misstatements

NB: PLEASE SET OUT YOUR ANSWER AS A TABLE IN THE FOLLOWING WAY

A. Balance-related audit objective

B. Preventive Internal Control

C. Tests of details of balances Audit Procedures