Total Accounts Receivable

Topics: Accounts receivable, Invoice, Accounts payable Pages: 8 (2282 words) Published: November 21, 2012
Bradmark Wholesale
General Supply
ACL Case Study
This paper contains the summary of the details and results of the audit tests on Bradmark’s Revenue and Expenditure Cycles. The audit tests were performed through the ACL Program.
Rachelle Cultura | Trixia Ebol | Christine Fonseca
Mary Rose Samas | Nadaine Tongco
Ross & Specter Co.
October 24, 2012
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Assessment of Internal Controls over the Revenue Cycle
The assessment of Bradmark’s internal controls over its revenue cycle procedures were done through the analysis of the processes each department is undertaking.
For the Sales Department, it is but right that the clerk will seek the approval of the credit manager for customers with insufficient available credit. However, the credit manager should not only verbally authorize the clerk to change credit limits. More so, it is inappropriate for him to delegate the said task to the clerk as it violates the general control of authorization.

Reconciliation of the documents – packing slip, shipping notice, and bill of lading – with the goods to be shipped must likewise be done for independent verification. Several copies of these documents must be made to be filed for future reference and monitored by the departments responsible in the each of the operational processes. In conclusion, Bradmark needs to improve some of the internal controls over its revenue cycle procedures. Existence or Occurrence

From Bradmark’s data files on sales invoices, cash receipts and list of customers, the ACL software was used to compute and determine the Accounts Receivable balances of customers in the books. January 20, 2005

United City
920 4
Bridgewater, New Jersey
Dear Sir/Madam,
In connection with an examination of our financial statements by Ross & Specter Co., Certified Public Accountants, 8th Avenue, Manhattan, New York (NY) 10014, we will appreciate it if you will indicate the correctness of the following information. Our records indicate that, at the close of business on December 31, 2004 the amount payable on your account was $8,627 Please sign the confirmation form in the space provided below if this amount agrees with your records. If it does not agree, do not sign below but explain and sign on the reverse side. Please return this form directly to our accountants in the enclosed envelope.

Very truly yours,
Ross & Specter Co.
Confirmation - Information is accurate:
Signature and date
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In order to verify the existence or occurrence of what these accounts actually owed to Bradmark, confirmation letters were sent to certain customers. Customers with unpaid balances in the records received confirmation requests from Bradmark. The figure above is an example of a positive confirmation letter that was sent to one of their clients, United City, asking for a verification of their balance amounting to $8,627. Similar positive confirmation letters were also sent to other customers with outstanding balances to the Company. Completeness

In terms of verifying whether the sales figure represent those that actually occurred and were shipped during the period, the Sales Invoice and Shipping Log records were joined. However, to find out which items were not shipped, using the unmatched category was necessary. Presented below is the result of this audit test. As observed, the sales last November 4, 2004 to Customer 65003 (University Electronics) was not in the record of shipped goods. This gap should be further investigated by verifying the delivery of the goods with the said customer.

In addition to that, there were items that were shipped past the cut-off date (December 31, 2004). The ACL procedure used to determine this was the filter function. The filter “Ship_Date > `20041231`” was used and the results are displayed below.

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In total, there are ten records that should...
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