Reference no: EM132943266
Green Acres Farms is a small wholesaler of fruits and vegetables selling to retail grocery stores. You are assigned to the audit of Green Acres for the year ended December 31, 2020. During your review of the sales transaction cycle, you note the following procedures:
Customer orders are phoned in, and entered into the computerized accounting system by sales staff in the sales department.
If the customer has not exceeded their credit limit, the orders are printed in the warehouse, where inventory clerks pick the stock for shipping.
When the order is complete, inventory clerks enter the actual quantities that are to be shipped into the computerized accounting system.
Invoices are immediately printed out to accompany the goods.
Selling prices are maintained in the accounting system only by the owner of Green Acres and she adjusts pricing weekly based upon current market conditions.
REQUIRED:
Problem a) Identify one internal control that supports the management assertion of:
- occurrence of sales
- completeness of sales
- accuracy of sales
Problem b) Design a specific control test for each internal control that you have identified.
Problem c) Design a specific substantive test of details for:
- occurrence of sales
- completeness of sales
- accuracy of sales