Chapter 9 – Revenue Cycle
Read the Bradmark Case located in the “Bradmark Case Description” folder and answer the following questions:
1) From the case description and the associated flowcharts, assess Bradmark’s internal controls over its revenue cycle procedures.
Bradmark Comprehensive CaseChapter 10 – Expenditure Cycle
1) From the case description and the associated flowcharts, assess Bradmark’s internal controls over its expenditure cycle procedures. From the case description and the flowcharts, Bradmark could still improve its internal control on the expenditure cycle procedures. The receiving system is not user friendly and any voided mistakes cause a gap in the receiving report number; the point of the RR number as a control is rendered moot. The employees also have to manually input the data. This could cause errors to occur and would be very time consuming. Also to avoid these problems, the management should have a blind document upon receiving their orders so that the clerk would not input it manually, thus, the clerk would only input the numbers of the receive items
2) Using the case description, the flowchart, the file structures, and the selected financial data below, specify an audit objective (that can be achieved using ACL™) for each management assertion presented in the matrix below. For each audit objective, briefly describe the ACL test procedure. As an example, the first row in the matrix has been completed for you.
Selected Bradmark Financial Data
Allowance for Doubtful Accounts (.02 x Sales) 107,600 Net Accounts Receivable4,644,657.70
Management AssertionAudit ObjectiveAudit Procedures to be Performed Using ACL Existence or OccurrenceVerify that the AR represents actually owed to BradmarkUse ACL to prepare confirmation letters for customers Completeness