Reference no: EM131790154
Assume you wishes to test controls over the sales ordering system of your client and you have made the following observations:
Orders are received by the sales office through the mail from customers.
A sales order form is immediately prepared in duplicate for each customer order. These sales order forms are pre-printed and kept in the sales office, but are not serially numbered.
- Copy No. 2 is retained on file together with the customer order.
- Copy No. 1 is sent to the credit department for authorisation and approval.
- The credit manager checks the order against the approved customers' list and the current accounts receivable subsidiary ledger account balance.
- The approved sales order is sent to the storekeeper, who checks whether the goods areavailable in stock to meet the request.
- If available, a multi-copy sales invoice is prepared.
The sales invoices are also pre-printed but are not serially numbered.
- One copy of the sales invoice is sent to the customer.
- A second copy is sent to the accounts department.
- A third copy is sent to the customer with the goods as a packing slip.
- A fourth copy is filed together with the customer order by the storekeeper.
The shipping clerk checks to make sure all shipments are accompanied by a copy of the sales invoice.
Required:Identify all the weaknesses in internal control over the existing sales ordering system. Recommend one improvement for each of the weaknesses identified. Describe appropriate audit tests the auditor may perform to determine if there are any errors or irregularities in their sales ordering system.