ACC 491 Week 4 Learning Team Assignment Apollo Shoes Case Assignment (1) 2015 version
- 1. ACC 491 Week 4 Learning Team Assignment Apollo Shoes Case Assignment (1) Link : http://uopexam.com/product/acc-491-week-4-learning-team-assignment-apollo-shoes- case-assignment-1/ Sample content Learning Team Assignment: Internal Control Audit – Apollo Shoes
- 2. ACC 491 ICQ for Apollo Shoes Assertions and Questions Yes, No, N/A Comments Occurrence assertion: 1. Is the credit department independent of the sales department? yes The sales clerks are part of the marketing department although the orders need to be presented to the credit manager which is part of the treasury department. 2. Are sales of the following types controlled by the same procedures described below? Sales to employees, COD sales, disposals of property, cash sales, and scrap sales. No The sales completed by multiple groups are completed by different company policies and procedures. 3. Is access to sales invoice blanks restricted? yes Invoiced sales are completed by the billing department and are further removed on a case to case basis. 4. Are pre-numbered bills of lading or other shipping documents prepared or completed in the shipping department? yes
- 3. The shipping department applies pre-numbered bill of lading forms along with a second copy that is attached to accounts receivable with every invoice. Completeness assertion: 5. Are sales invoice blanks pre-numbered? yes Blank sale invoices are previously numbered and the sequence of which is checked. 6. Is the sequence checked for missing invoices? yes The appointed numerical sequence is then applied to an accounts receivable clerk who then acknowledges any missing invoices along with accounts that have expired. 7. Is the shipping document numerical sequence checked for missing bills of lading numbers? No There is no observation of this control. This is probably the reason why the inventory can potentially be misstated. Accuracy assertion: 8. Are all credit sales approved by the credit department prior to shipment? yes Sales orders in general must be authorized by a credit manager before any further processes. 9. Are sales prices and terms based on approved standards? no
- 4. Sales clerks record prices but are often wrong as several tests have shown and the results presented in the sales invoice. Due to this, there are common mistakes with particular invoices which are then turned into mistakes on the actual recorded sales. 10. Are returned sales credits and other credits supported by documentation as to receipt, condition, and quantity, and approved by a responsible officer? no I am not familiar with this type of control. There is a likelihood of fraud because no documentation is needed or approved by a responsible officer prior to accounts being accepted or approved by accounts receivable. 11. Are shipped quantities compared to invoice quantities? yes The Inventory storeskeeper eliminates inventory based on invoices, shipping employees, and the verification of packages before their packed into boxes. 12. Are sales invoices checked for error in quantities, prices, extensions and footing, and freight allowances, and checked with customers’ orders? yes The accounts receivable clerk verifies multiple aspects of the invoice as they check that the numerical sequences are accurate. 13. Is there an overall check on arithmetic accuracy of period sales data by a statistical or product-line analysis? Yes The general ledger supervisor compares monthly sales invoices to accounts receivable control and sale revenue accounts. 14. Are periodic sales data reported directly to general ledger accounting independent of accounts receivable accounting?
- 5. No The general ledger supervisor reconciles account balances and checks monthly sales batches but both are equally established by the accounts receivable department. This allows fraud to be detected because accounts receivable is also involved in various aspects throughout the transaction cycle. Classification objective: 15. Does the accounting manual contain instructions for classifying sales? yes Sales are reviewed by accounts receivable department and documented as one of the three product line revenue accounts. Cutoff objective: 16. Does the accounting manual contain instructions to date sales invoices on the shipment date? no Any charges to the account are subjected to shipping dates not related to sales invoices and are dated according to the shipping date. This increases the chances that incorrect entries of customer accounts. Flowchart Revenue and Cash Receipts Cycle – Bridge Working Paper ICC Index # Control Activity Audit Implications Tests of Controls Compensating Audit Procedures
- 6. S-1 Control over consumer order processing, includes a safeguard for preventing any unauthorized changes. Customer orders are completed different compared to processes such as telephone, email, etc. Furthermore, there are numerous individuals that have access to these utilities immediately before they are forced to share information with a credit manager. Acknowledge to determine how the sales environment is like when the department is busy. Search customer information to discover customer complaints about orders. Assuming observations and inquiries show weaknesses, sampling techniques are applied in order to gather information from customers in relation to occurrence and accuracy of orders. S-1 Segregation of responsibilities for sales and credit checks. This type of segregation is present, reducing the risk of making bad debts and creating unnecessary expenses. Acknowledge various observations to determine what processes are used to determine customer credit and issue their following approval. Make inquiries in order to check the consistency of credit checks. Finally, evaluate the processes to determine the weaknesses. The use of sampling techniques in order to test whether or not credit checks can be completed to constantly determine authorized, obtained sales. S-1 Evaluation of sales, estimates, and their accuracy. The sales departments complete estimates for their clients, which could potentially contain errors. Lack of this results in invoices not being flagged when credit is not approved.