Client Control Procedures and Audit Tests of Controls. Exhibit 7.64.1 contains an arrangement of examples of transaction errors (lettered a–g) and a set of client control procedures and devices (numbered 1–15).Required:For each client control procedure numbered 1–15, write a test of controls that could produce evidence on the question of whether the client’s control procedure has been implemented and is in operation. EXHIBIT 7.64.1a.Sales recorded, goods not shippedb.Goods shipped, sales not recordedC.Goods shipped to a bad credit risk customerd.Sales billed at the wrong price or wrong quantityе.Product line A sales recorded as Product line Bf.Failure to post charges to customers for salesg. January sales recorded in DecemberCONTROL PROCEDURES1. Sales order approved for credit2. Prenumbered shipping doc prepared, sequence checked3. Shipping document quantity compared to sales invoice4. Prenumbered sales invoices, sequence checked5. Sales invoice checked to sales order6. Invoiced prices compared to approved price list7. General ledger code checked for sales product lines8. Sales dollar batch totals compared to sales journal9. Periodic sales total compared to same period accountsreceivable postings10. Accountants have instructions to date sales on the date ofshipment11. Sales entry date compared to shipping doc date12. Accounts receivable subsidiary totaled and reconciled toaccounts receivable control account13. Intercompany accounts reconciled with subsidiary companyrecords14. Credit files updated for customer payment history15.Overdue customer accounts investigated for collection

Test of controls: The test of controls includes the procedures that are developed to generate…

Answered: EXHIBIT 7.64.1 a. Sales recorded, goods…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Client Control Procedures and Audit Tests of Controls. Exhibit 7.64.1 contains an arrangement of examples of transaction errors (lettered a–g) and a set of client control procedures and devices (numbered 1–15).
Required:
For each client control procedure numbered 1–15, write a test of controls that could produce evidence on the question of whether the client’s control procedure has been implemented and is in operation.

EXHIBIT 7.64.1
a.
Sales recorded, goods not shipped
b.
Goods shipped, sales not recorded
C.
Goods shipped to a bad credit risk customer
d.
Sales billed at the wrong price or wrong quantity
е.
Product line A sales recorded as Product line B
f.
Failure to post charges to customers for sales
g. January sales recorded in December
CONTROL PROCEDURES
1. Sales order approved for credit
2. Prenumbered shipping doc prepared, sequence checked
3. Shipping document quantity compared to sales invoice
4. Prenumbered sales invoices, sequence checked
5. Sales invoice checked to sales order
6. Invoiced prices compared to approved price list
7. General ledger code checked for sales product lines
8. Sales dollar batch totals compared to sales journal
9. Periodic sales total compared to same period accounts
receivable postings
10. Accountants have instructions to date sales on the date of
shipment
11. Sales entry date compared to shipping doc date
12. Accounts receivable subsidiary totaled and reconciled to
accounts receivable control account
13. Intercompany accounts reconciled with subsidiary company
records
14. Credit files updated for customer payment history
15.
Overdue customer accounts investigated for collection

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