Prevent controls alabama industries manufactures and

Reference no: EM13377320

PREVENT CONTROLS Alabama Industries manufactures and wholesales small tools. It sells the tools to a large group of regular customers and makes most sales by telephone to this group. Additionally, it receives orders online by its sales team who sign up new customers within the sales area. In the past Alabama Industries has had trouble with customers who do not pay their accounts on time. Despite instructing the sales team not to make sales to customers before their limits have been set and to existing customers beyond their credit limit. Also, the economic recession has started to impact its customers, and Alabama's management is concerned about the possibility of increasing bad debts.

Required :

(a) What sort of prevent control could be used to deal with the problems faced by Alabama industries? Explain how the control would work ?

(b) Assume the prevent control is implemented and during this year there have been no sales to customers that have taken any customer beyond its credit limit. What are the two possible explanations for this that the auditor must consider?

(c) If an auditor finds 2 sales transactions during the year that are in excess of a customer's credit limit at the time of the sale, what conclusion would the auditor draw from this evidence? What other evidence could the auditor consider before concluding that prevent control has failed?

Reference no: EM13377320

Questions Cloud

If demand in the united states is given by q1 7200 - 300p1 : if demand in the united states is given by q1 7200 - 300p1 where p1 is the price in the united states and if the

Question 1 determine whether the following benefits are : question 1 determine whether the following benefits are fringe benefits or exempt fringebenefits and where applicable

A profit-maximizing monopoly faces an inverse demand : a profit-maximizing monopoly faces an inverse demand function described by the equation py 50 - y and its total costs

If the demand schedule for bongs book is q 2000-100p the : if the demand schedule for bongs book is q 2000-100p the cost of having the book typeset is 9000 and the marginal cost

Prevent controls alabama industries manufactures and : prevent controls alabama industries manufactures and wholesales small tools. it sells the tools to a large group of

Historically shifts towards a more expansionary monetary : historically shifts towards a more expansionary monetary policy have often been associated with increases in real

Questionwhile out at a consulting engagement one of your : questionwhile out at a consulting engagement one of your graduate staff members comes to you with the following

Suppose that the cost of capturing a cockatoo and : suppose that the cost of capturing a cockatoo and transporting him to the united states is about 40 per bird.

Youcpa is a regional cpa firm engaged in public audit work : youcpa is a regional cpa firm engaged in public audit work of small- and medium-size firms in the midwest. the youcpa

User Account

All Pages