Module III: Control Testing – Sales Processing
1. The sampling plan in the design of controls does not provide tests about revenues and accounts receivables. The weakness that I could see is the fact that goods that were delivered to customers were not billed which result in bill of lading not being pre-numbered. Because of this, bills of lading do not count as an effective sampling unit. For a successful audit, auditors need to evaluate orders randomly and check to see if the goods were shipped and the customers received invoices prior to the receipt of the product, Therefore in this case, existence/occurrence is the course of action for the auditors.
2 and 3 are attached under “2009 attribu”
4. The sampling plan shows that there is an effective control of the company by the people in charge since the price of the products, the quantity of the footing and the credit limits offered to customers are not above the limitation. However the bills of ladings that were missing keep the auditors skeptical and make them look further for material information. Also, the other thing that looks suspicious is the inflated earnings showed. The analytical procedures and attribute testing performed will the auditors to look further in regards of the sales recorded during the year, the customer balanced and the accounts receivable. Therefore, I believe that aggregate materiality threshold shouldn’t be lowered since both accounts receivable and sales tests show earning’s inflation.
Module IV: MUS Sampling- Factory Equipment Additions
1. The objective of performing this test is to test if the factory equipment accounts are materially overstated from the errors found in the capitalization of ordinary repairs. The sampling unit is the debit posting to the factory equipment account and the population is $12,600,000 which is the difference between the total debits of $89,860,000 and the equipment additions of $77,260,000
2. Find excel document “2009 MUS”