You are an audit senior in Brennon & Lewis a public accounting firm.You are currently working on the audit of Seeley Company, one of the firm's clients, and you are preparing the audit program for the sales and collection cycle.

Client Background - Sales system

Seeley Co. is a wholesaler of electrical goods such as kettles, televisions and MP3 players. The company maintains one large warehouse in a major city. The customers of Seeley are owners of small retail shops. Seeley only sells to authorized customers. Following appropriate credit checks, each customer is given a Seeley identification card to confirm their status. The card must be used to obtain goods from the warehouse.

Dispatch and sales system

The dispatch and sales system operates as follows:

1. Customers visit Seeley's warehouse and load the goods they require into their vans after showing their Seeley identification card to the dispatch staff.

2. A pre-numbered goods dispatch note (GDN) is produced and signed by the customer and a member of Seeley's dispatch staff confirming the goods taken.

3. One copy of the GDN is sent to the accounting department, the second copy is retained in the dispatch department.

4. Accounting staff enter the goods dispatch information onto the computerized sales system. The GDN is initialled.

5. The computer system produces the sales invoice, with reference to the stock master file for product details and prices, and it maintains the sales files and also the accounts receivable ledger files.

6. Invoices are printed out and mailed to each customer with paper copies maintained in the accounting department. Invoices are compared to GDNs by accounting staff and initialled.

7. Paper copies of the accounts receivable subledger and a list of aged accounts receivable are also available.

8. Error reports are produced showing breaks in the GDN sequence.

Required:

explain the step necessary to check the accuracy of the previous year's internal control questionaries