- 12 Marks
AA – Nov 2017 – L2 – Q2b – Audit and Assurance Evidence
Tabulate four tests of controls the auditor would perform on the sales system of Animo Company Limited, along with their objectives.
Question
Animo Company Ltd has been operating in the manufacturing sector for over a decade. The company achieved significant growth but had weak internal controls in its early stages. To meet increasing demand, Animo acquired a large manufacturing plant and six warehouses for final product storage. Sales ordering, goods despatch, and invoicing customers are organized using unique reference numbers, and a price list is updated quarterly. Customers also receive discounts for bulk purchases. Sales orders are managed electronically, with despatch lists and goods delivery notes generated automatically for each order.
Required:
i) Tabulate four tests of controls the auditor would normally carry out on the sales system of Animo Company Limited and state the objective for each test.
ii) Describe two substantive procedures the auditor should perform to confirm Animo Company Limited’s year-end receivables balance.
Find Related Questions by Tags, levels, etc.
- Tags: Audit evidence, Internal Controls, Risk Management, Sales Cycle, Tests of Controls
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Series: NOV 2017