Items 1 through 10 present various internal controlstrengths or internal control deficiencies.1. Credit is granted by a credit department.2. Once shipment occurs and is recorded in the sales journal, all shipping documentsare marked “recorded” by the accounting staff.3. Sales returns are presented to a sales department clerk who prepares a written,prenumbered receiving report.4. Cash receipts received in the mail are received by a secretary with no recordkeepingresponsibility.5. Cash receipts received in the mail are forwarded unopened with remittance advicesto accounting.6. The cash receipts journal is prepared by the treasurer’s department.7. Cash is deposited weekly.8. Statements are sent monthly to customers.9. Write-offs of accounts receivable are approved by the controller.10. The bank reconciliation is prepared by individuals independent of cash receiptsrecordkeeping.a. For each of the preceding 1–10 items, indicate whether the item represents an:A. Internal control strength for the sales and collection cycle.B. Internal control deficiency for the sales and collection cycle.b. For each item that you answered (A), indicate the transaction-related audit objective(s) to which the control relates.c. For each item that you answered (B), indicate the nature of the deficiency.*
Items 1 through 10 present various internal control
strengths or internal control deficiencies.
1. Credit is granted by a credit department.
2. Once shipment occurs and is recorded in the sales journal, all shipping documents
are marked “recorded” by the accounting staff.
3. Sales returns are presented to a sales department clerk who prepares a written,
prenumbered receiving report.
4. Cash receipts received in the mail are received by a secretary with no recordkeeping
responsibility.
5. Cash receipts received in the mail are forwarded unopened with remittance advices
to accounting.
6. The cash receipts journal is prepared by the treasurer’s department.
7. Cash is deposited weekly.
8. Statements are sent monthly to customers.
9. Write-offs of
10. The bank reconciliation is prepared by individuals independent of cash receipts
recordkeeping.
a. For each of the preceding 1–10 items, indicate whether the item represents an:
A. Internal control strength for the sales and collection cycle.
B. Internal control deficiency for the sales and collection cycle.
b. For each item that you answered (A), indicate the transaction-related audit objective(s) to which the control relates.
c. For each item that you answered (B), indicate the nature of the deficiency.*
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