Exam 9: Auditing the Revenue Cycle

When Clipper Mail Order Co.receives telephone and fax orders,the billing department prepares an invoice.The invoice is mailed immediately.A copy of the invoice serves as a shipping notice.The shipping department removes inventory from the warehouse and prepares the shipment.When the order is complete,the goods are shipped.The clerk checks the customer's credit before recording the sale in the general journal and the account receivable subsidiary ledger. The receptionist opens the mail and lists all payments.The receptionist also handles all customer complaints and prepares sales return forms for defective merchandise.The cashier records all cash receipts in the general journal and makes the appropriate entry in the accounts receivable subsidiary ledger.The cashier prepares the daily bank deposit. Describe at least four internal control weaknesses at Clipper Mail Order Co.

In real-time processing systems,routine credit authorizations are automated.

A customer payment of $247 was correctly posted in the general ledger but was recorded as $274 in the customer's account receivable.Describe a specific internal control procedure that would detect this error.

A remittance advice is

Which document is NOT prepared by the sales department?