Date Mon 21 JAN 2008 10 32 16 0000 From Bradley Crumpler TheCrumpler Aow cpa Subject Test of Controls Attachment Revenue Cycle Test of Controls xls Of the 120 sales transactions you asked me to look at I found 51 deviations I have attached a list These were the procedures that I used 1 I randomly chose the sample of 120 transactions across the year with 10 from each calendar month 2 I found all the invoices in the sample None were missing 3 All the invoices were properly posted to the general ledger sales and accounts receivable control accounts and each was posted to the right customer s individual account 4 The invoices not listed had no deviations related to other documents recalculations or comparisons in the documents 5 No credit approval means that the expected credit approval notation could not be found 6 When Wrong quantity billed appears a description of the effect follows 7 CM date means the customer notified Apollo of an error and a credit memo was issued on the subsequent date All credit memos generate debits to a sales returns account and credits to accounts receivable 8 Paid in full on time means the customer paid the invoice when it was due 9 Missing BL means the bill of lading shipping document could not be found 10 Wrong price means the clerks put the wrong unit price on the invoice and billed the customer incorrectly total 11 Arithmetic error means I found the invoice multiplied and added to show an incorrect 12 I found purchase orders from each customer except for the December shipment to Mall Warts Because there was no purchase order I looked at the sales and shipping documents The cost of the inventory shipped was 3 169 145 10 Memo from what Bradley s findings We have reviewed the list from Bradley and found that there were some errors occurred 1 Apollo Shoes faced financial problems in the fourth quarter of the year 2 Missing bills from sales transactions caused by improperly recording sales 3 Overstating sales for the month of December may affect the financial statements 4 Lack of credit approval for 5 Errors in billing During the audit we have found that there are some issues within Apollo Shoes that needs to be fixed As stated above we have financial problems in fourth quarter the sales did not match due to lacking of bills recorded deviations were overstated lack of credit approvals and errors in billing customers Because of these problems we have difficulties in audit process These problems need to be fixed before we can continue our audit and then to make sure the records are accurate to the numbers We encourage you to make sure everything is accurate as soon as possible It will be the best if you can have the employees help with entering the data correcting customer costs so we can finish the audit process in time frame
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