Lê Viết Nhật Quang – 31221025758

8.21/
Control Assertion Tests of control
All cash handling is independent of accounting Accuracy Observation that cash handling is
functions independent of accounting
(recording functions)

Cash receipts are matched to specific sales invoices Occurrence Selection of a sample of entries in
before being posted to the accounts receivable cash receipts journal and reviewing
master file of evidence that it was matched to
specific sales invoices

There is an independent check that cash receipts Classification Examination of evidence that an
are recorded in the correct account independent check of cash receipt
classification was carried out

There is a comparison of deposit slips, pre-lists and
the posting to the cash receipts journal
Completeness Selection of a sample of remittance
advices or items on pre-list and
tracing of deposits on bank
statements and the recorded cash
receipts

There is a policy of depositing cash receipts each Completeness Enquiry about the policy of
day depositing cash receipts each day,
and reviewing of bank deposit slips
to check that this was actually done

8.22/
Key controls
Credit limits on orders are reviewed by the credit manager for
their approval
Orders are subject to various computer edit checks when they
are inputted on the terminal in the sales order department. Only
those orders satisfying all edit criteria are accepted.
Rejected orders are noted by the data entry clerk and passed to
Tests of controls
Select a sample of sales and ensure all sales are made to
authorised customers. Look for evidence of the credit manager’s
approval
- Re-perform edit checks on a sample of sales orders to
see if automated control is working
- Using test data, submit a dummy invoice with errors and
see if it is rejected
Select a sample of rejected orders and check the investigation or
department’s supervisor for investigation
Segregation of duties in receiving, entering, checking and
picking orders.
8.23/
Test
Selected a number of suppliers’
invoices and checked that the
pricing and discount terms have
been reviewed and authorised by
the purchase manager
any follow-up edit checks made. Check that rejected orders are
marked ‘rejected’ and not included in sales without further edit
checks.
Observe functions for receiving, entering, checking and picking
orders being performed.
(a) Key assertion (b) Conclusion (c) Key additional procedure to
addressed appropriate or be performed
inappropriate
Accuracy, valuation Not appropriate, as Depending on required confidence
and allocation testing compliance with level, tolerable error and nature of
procedure. Materiality of deviation/ non-compliance;
errors is relevant for - Extend level of test of controls/
substantive tests, not increase sample size for test of
tests of control. Need to controls
extrapolate to population Or
and compare to tolerable - Reduce reliance on internal
error control and increase level of
substantive testing for
prices/discounts claimed with
supplies.