In testing controls related to a client's processing of credit sales transactions, auditors need to define "deviations" in advance. Give six examples of deviations from control objectives.
What will be an ideal response?
a. Validity-recorded sales are not supported by shipping documentation and sales orders; therefore, fictitious sales might be recorded.
b. Completeness-the numerical sequence of shipping documentation is not accounted for; therefore, shipments to customers might not be recorded as sales.
c. Authorization-there is no evidence of the approval of customer sales orders; therefore, goods might be shipped to customers without credit approval.
d. Accuracy-there is no evidence that sales invoices have been checked to ensure that the quantity shipped and/or the unit prices billed are correct; therefore, billed amounts may be incorrect.
e. Classification-there is no chart of accounts; therefore, sales might be recorded in the wrong revenue account.
f. Proper period cutoff-there is no internal verification that all sales transactions are recorded on a daily basis; therefore, sales could be recorded on the wrong date.
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Indicate whether the statement is true or false
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a. True b. False Indicate whether the statement is true or false