Tugas Kelompok CH 14 Auditing [PDF]

Zitiervorschau

TUGAS KELOMPOK AUDITING II

Kelompok 4 -

Amel Galuh Nur Fajar Winda Arung Surya Yashinta Widyastuti

(16110107152)

CASE 14-33 (Objective 14-4) The Meyers Pharmaceutical Company, a drug manufacturer, has the following internal controls for billing and recording accounts receivable: 1. An incoming customer’s purchase order is received in the order department by a clerk who prepares a prenumbered company sales order form on which is inserted the pertinent information, such as the customer’s name and address, customer’s account number, quantity, and items ordered. After the sales order form has been prepared, the customer’s purchase order is attached to it. 2. The sales order form is then passed to the credit department for credit approval. Rough approximations of the billing values of the orders are made in the credit department for those accounts on which credit limitations are imposed. After investigation, approval of credit is noted on the form. 3. Next, the sales order form is passed to the billing department, where a clerk uses a computer to generate the customer’s invoice. It automatically multiplies the number of items times the unit price and adds the extended amounts for the total amount of the invoice. The billing clerk determines the unit prices for the items from a list of billing prices.The invoice copies are designated as follows: (a) Customer’s copy. (b) Sales department copy, for information purposes. (c) File copy. (d) Shipping department copy, which serves as a shipping order. Bills of lading are also prepared as carbon copy by-products of the invoicing procedure. 4. The shipping department copy of the invoice and the bills of lading are then sent to the shipping department. After the order has been shipped, copies of the bill of lading are returned to the billing department. The shipping department copy of the invoice is filed in the shipping department. 5. In the billing department, one copy of the bill of lading is attached to the customer’s copy of the invoice and both are mailed to the customer. The other copy of the bill of lading, together with the sales order form, is then attached to the invoice file copy and filed in invoice numerical order. 6. As the computer generates invoices, it also stores the transactions in an electronic file that is used to update the accounting records daily. A summary report is generated and all journals and ledgers are printed for a hardcopy of the records.

7. Periodically, an internal auditor traces a sample of sales orders all the way through the system to the journals and ledgers, testing both the procedures and dollar amounts.

REQUIRED : The procedures include comparing control totals with output, recalculating invoices and refooting journals, and tracing totals to the master file and general ledger. A. Flowchart the billing function as a means of understanding the system. B. List the internal controls over sales for each of the six transaction-related audit objectives. C. For each control, list a useful test of control to verify the effectiveness of the control. D. For each transaction-related audit objective for sales, list appropriate substantive tests of transactions audit procedures, considering internal controls. E. Combine the audit procedures from parts c. and d. into an efficient audit program for sales.

ANSWER A.

Flowchart the billing function as a means of understanding the system.

SUMMARY OF FLOWCHART 1. Order department receives customer’s purchase order. Then, prepare prenumbered sales order form (inserted the pertinent information). 2. Sales order form passed to credit department for credit approval. 3. Billing dept clerk entered data into computer to generate customer’s invoice. The billing clerk determines the unit prices for the items from a list of billing prices. 4. The billing is done on pre-numbered, continuous, carbon-interleaved forms having the following designations : (a) Customer’s copy (b) Sales department copy, for information purpose (c) File copy (d) Shipping department copy, which serve as the shipping order. Bill of lading are also prepared as carbon copy-products of the invoicing procedure. 5. Sales invoices and bill of lading are then sent to the shipping department. 6. After the order has been shipped, copies of bill of lading are returned to the billing department. Then the invoice is filed in shipping department. 7. 1 copy of bill of lading is attached customer invoice to be mail to customer. Another copy attached with sales order form and then filed in invoice numerical order. 8. The computer generates invoices and store the transaction on disk that will update the computerized accounting records which is run daily. Then, it generates summary report and prepare the hardcopy output of all journals and ledgers.

B.

List the internal controls over sales for each of the six transaction-related audit objectives. The Six Transaction-Related Audit

Internal Control

Objectives 1) Recorded sales occurred

-

Bill of lading and sales order

The auditors is concerned with the

form are attached to invoice.

possibility

Sales are initiated by sales order

of

three

misstatement;

types

sales

of

form from customer.

being

included in the journals for which

-

Credit is approved by credit

no shipment was made, sales

department by comparison to

recorded more than once and

authorized credit limit before

shipment

shipment

being

nonexistence

made

customers

to and

of

merchandise

is

authorized.

recorded as sales. 2) Existing sales transaction

-

Bill of lading and invoices are

In many audits, no substantive test

pre-numbered

and

prepared

of transactions are made for the

before merchandise is shipped.

completeness objectives on the grounds that overstatements of assets and income are a greater concern in the audit of sales transactions

than

their

understatements. 3) Sales are accurately recorded The accurate recording of sales transactions concerns shipping the amount

of

goods

ordered,

accurately billing for the amount of goods shipped and accurately

-

Control totals are prepared and checked by computer.

recording the amount billed in the accounting record. 4) Recorded

sales

are

properly

correct

general

-

None

-

None

-

Sales transactions are recorded

classified Charging

the

ledger account is less of a problem in

sale

than

in

some

other

transaction cycles, but it is still of some concern. 5) Sales are recorded on the correct dates Sales

should

be

billed

and

recorded as soon after shipment takes place as possible to prevent the

unintentional

omission

of

transactions from the record and to

make

sure

that

sales

are

recorded in the proper period. 6) Sales transaction are correctly included in the master file and

in sales, accounts receivable,

correctly summarized

cost of sales, and relieved from

The proper inclusion of all sale

the perpetual inventory.

transaction

in

the

accounts

receivable master file is essential because the accuracy of these records affect the client’s ability to collect outstanding receivables.

C.

For each control, list a useful test of control to verify the effectiveness of the control. The Six Transaction-Related Audit

Test Of Control

Objectives 1) Recorded sales occurred

-

Examine

sales

invoice

for

supporting bill of lading and customer order form -

Examine sales order form for evidence

of

credit

approval.

Review client's credit approval system for effectiveness. 2) Existing sales transaction

-

Account for numerical sequences of

bills

of

lading

and

sales

invoices and determine that all have been recorded. 3) Sales are accurately recorded

-

Examine computer edit reports to detect the errors and disposition.

4) Recorded sales are properly

-

Not applicable.

-

Not applicable.

-

Trace sales transactions to sales

classified 5) Sales are recorded on the correct dates 6) Sales transaction are correctly included in the master file and correctly summarized

D.

journal.

For each transaction-related audit objective for sales, list appropriate substantive tests of transactions audit procedures, considering internal controls.

TRANSACTION-RELATED AUDIT OBJECTIVE 1) recorded sales are for shipments actually made to existing customers . (existence/occurrence)

2) existing sales are recorded.

transaction

SUBSTANTIVE TESTS OF TRANSACTIONS

-

Select sample of sales from sales journal

-

Trace sales journal entries to supporting documents & examine customer’s purchase order, sales order form & bill of lading to make sure that the goods were ordered and shipped.

-

Trace selected shipping documents to the sales journal to be sure that each one is included.

-

Perform analytical tests to assess the accounts and other relevant information are consistent.

-

Trace entries in sales journal to sales invoice to compare sales price to price list to make sure that the total sales are correctly billed.

-

Examine customer correspondence indicating pricing disputes.

-

Trace details on sales invoices to shipping documents, sales order &customer order to make sure that the amount of goods shipped are correctly recorded.

-

examine sales documents to determine that sales transactions are properly classified.

-

Examine duplicate sales invoice for proper account classification.

-

Compare date of recording of sale in sales journal with sales invoice as well as bill of lading to determine that sales are recorded on a timely basis.

(completeness)

3) recorded sales are for the amount of goods shipped and are correctly billed & recorded. (accuracy)

4) recorded sales transaction are properly classified. (classification)

5) sales are recorded on the correct dates. (timing)

6) sales transactions are properly included in the master file and are correctly summarized. (posting and summarization)

-

Compare sales month to month and investigate any significant fluctuations.

-

Trace selected sales invoice to the account receivable master file and test for amount, date and invoice number.

-

Foot and cross-foot the sales journal and trace totals to the general ledger.

E.

Combine the audit procedures from parts c. and d. into an efficient audit program for sales.

THE MEYERS PHARMACEUTICAL COMPANY AUDIT PROGRAM FOR TESTS OF CONTROL AND SUBSTANTIVE TESTS OF TRANSACTIONS AUDIT PROCEDURE FOR SALES 1- Obtain the sales journal for the year. 2- Foot and cross-foot the sales journal including trace and reconcile the totals to the general ledger balance. 3- Select a sample of sales invoice from the sales journal : a) Check the customer's purchase order, sales order form, and bill of lading are available. b)

Compare the quantity, sales price, customer name, and date of shipment to sales journal. Obtain explanations of any differences.

c) Check the sales order form to make sure that it is granted for credit approval. d) Compare sales price with price list to examine the approved price list. e) Test clerical accuracy of sales invoices. f)

Examine that sales transaction are properly classified.

4- Select a sample of bill of lading : a) Trace them to the sales journal to check for the record of shipments. b) Compare the dates in the bill of lading to the sales journal to determine the transactions were recorded accurately. 5- Prepare the schedule of sales, cost of sales and gross margin percentage, showing comparison between recent years. Compare the sales months to months or to prior years and obtain explanation if any significant fluctuation occurred.