The following are audit procedures in the revenue cycle:
1. Examine a sample of shipping documents to determine whether each has a sales invoice number included on it.
2. Examine a sample of noncash credits in the accounts receivable master file to determine if the accounting supervisor has initialled supporting documents for each, indicating internal verification.
3. Discuss with the sales manager whether any sales allowances have been granted after the balance sheet date that may apply to the current period.
4. Add the columns on the aged trial balance, and compare the total with the general ledger.
5. Observe whether the controller makes an independent comparison of the total in the general ledger with the trial balance of accounts receivable.
6. Compare the date on a sample of shipping documents throughout the year with related duplicate sales invoices and the accounts receivable master file.
7. Examine a sample of customer orders and see if each has a credit authorization.
8. Compare the date on a sample of shipping documents a few days before and after the balance sheet date with related sales journal transactions.
9. Compute the ratio of allowance for uncollectible accounts divided by accounts receivable, and compare with those of previous years.
REQUIRED
a. For each procedure, identify the applicable type of audit evidence.
b. For each procedure, identify which of the following it is:
(1) Test of control.
(2) Analytical procedure (state whether it is for planning or as a substantive test).
(3) Test of details of balances.
c. For those procedures you identified as a test of control, what transaction-related audit objective or objectives are being satisfied?
d. For those procedures you identified as a test of details of balances, what balance-related or presentation and disclosure-related audit objective or objectives are being satisfied?