Audit homework

Your firm has been engaged to audit the financial statements of Haven Ltd. In obtaining an intelligence of Internal control relating to impute gross sales, the following questionnaire Is used 1 Does the ships company evaluate the customers credit history, and is join of available credit checked earlier a sale is authorized? Select a sample of credit order and inspect credit history and other supporting documents. go over the policy/procedure for customer approval and setting of credit limits. 2 Is in that location fitting segregation of duties between authoring sales, raptus goods, ND enter sales?Observe and deliver inquiries about the performance of various functions and duties. 3. Does counseling comp atomic number 18 all dispatchs with recorded sales to ensure that all sales are recorded? Submit test data for a operation that has shipping information, both with and without a supporting sales billhook. Select a sample of sales Invoices and examine for evidence that the company compared details to one-sided documents, purchase orders, and sales orders. 4. Is every recorded sale checked against shipping records for nicety of revenue recognition? Submit test data where invoice data does not match with underlying shipping information. Are there adequate controls over the accuracy of the sales invoice? Select a sample of sales Invoices and examine them. 6 Are there adequate controls to ensure that the sales Invoices are recorded In the elucidate cartridge holder period? Ledger. Perform sales cut-off tests to obtain assurance that sales proceeding and corresponding entries for inventories and cost of goods sold are recorded in the uniform and prissy period. The sales cutoff test involves Examining shipping documents for several age before and after the cutoff date to determine the date and scathe of shipment.Tracing shipping documents to sales and inventory records to establish that the entries were made in the correct accounting period. I nspecting invoices for a period of time before and after the cutoff date to ascertain the validity and propriety of the shipments and corresponding entries. Inquiring of caution about any direct shipments by outside suppliers to customers and determining the appropriateness of related entries. 7 Are there adequate controls to ensure that the proper customer is invoiced for shipments?Submit test data the customer who received the shipment but does not match the underlying customer information on the sales order. 8 Does management review all sales that are recorded on a weekly basis? Observe and make inquiries about the managements comments made on weekly sales report 9 Do adequate controls exist to review company accounting policies regarding revenue recognition? Observe and inquire about the policies regarding revenue recognition. 10 Do adequate controls exist to review the consistency of the estimation of the wages for dubitable debts?Review subsequent cash receipts from the cus tomer, discusses unpaid accounts with the credit coach-and-four and examines the credit files. These should contain customers financial statements, credit reports and listener estimates the likely amount of non-payment for the customer, which is included in the estimate of the allowance for doubtful accounts. In addition, an allowance should be estimated for all other customers, perhaps as a component of the current accounts and a higher percentage of past due accounts. The auditor compares his/her estimate to the balance in the allowance account and proposes an adjusting entry for the difference.Required come upon a possible test of controls for the control procedure, assuming a Yes solution to each question? ANSWER Tests of controls are auditing procedures performed to determine the effectiveness of the digit and operation of internecine controls. The auditor should obtain audit evidence through tests of controls to support any assessment of control risk that is less than high. The overturn the assessment of control risk, the more support the auditor should obtain that internal systems are suitably designed and operating effectively. 11. 30 Greener Pasture gentleness Ltd (Green Pasture) is a private nursing home.