Auditing

QUESTION 1

Control Assertion of interest Test Procedure (a ) cash receipts are matched to specific sales invoices before being posted to accounts receivable master file

Existence of accounts receivable To test this control , a sample of cash receipts should be selected from the cash receipt book . The auditor should then trace these amounts to the accounts receivable sub ledgers and ensure that the receipts were posted correctly and in the correct period (b ) there is a comparison of deposit slips , prelists and the posting to the cash receipts journal

Existence of

cash The effectiveness of this control could be tested by selecting a sample of cash receipts journals and comparing this with the daily cash book receipts summary and the deposit slip to ensure that the amounts in the cash book tally with the deposit slips (c ) cash handling is independent of accounting functions Completeness of cash The auditor should ensure that this control is effective by understanding the structure of the accounting function and the reporting lines for those handling cash . The accounting system rights for the person handling cash should be limited to posting of cash receipts . No access should be granted to posting of payments , credit notes or generation of sales . This could be checked through a review of the application controls in LOL Limited accounting system (d ) There is an independent check that cash receipts are recorded in the correct account

Completeness of accounts receivable Confirmations should be sought directly from a sample of debtors . The...