Sample content Learning Team Assignment: Internal Control Audit – Apollo Shoes ACC 490 Assertions and Questions Yes, No, N/A Comments Occurrence assertion: 1. Is the credit department independent of the sales department? Yes The salesclerks are in the marketing division and order requiring credit authorization is taken to the credit manager in the treasury division. 2. Are sales of the following types controlled by the same procedures described below? Sales to employees, COD sales, disposals of property, cash sales, and scrap sales. No The sales by various teams are handled differently as per organization policies and methods. 3. Is access to sales invoice blanks restricted? Yes Sales bills are locked up in the billing division and are taken out on an as-needed basis. 4. Are pre-numbered bills of lading or other shipping documents prepared or completed in the shipping department? Yes The delivery division utilizes a pre-numbered Bill of Lading havi

1. ACC 490 Week 4 LT Assignment Apollo Shoes Case Assignment
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Sample content
Learning Team Assignment:
Internal Control Audit – Apollo Shoes

2. ACC 490
Assertions and Questions
Yes, No, N/A
Comments
Occurrence assertion:
1. Is the credit department independent of the sales department?
Yes
The salesclerks are in the marketing division and order requiring credit
authorization is taken to the credit manager in the treasury division.
2. Are sales of the following types controlled by the same procedures described
below? Sales to employees, COD sales, disposals of property, cash sales, and
scrap sales.
No
The sales by various teams are handled differently as per organization policies
and methods.
3. Is access to sales invoice blanks restricted?
Yes
Sales bills are locked up in the billing division and are taken out on an as-needed
basis.
4. Are pre-numbered bills of lading or other shipping documents prepared or
completed in the shipping department?
Yes

3. The delivery division utilizes a pre-numbered Bill of Lading having 2 copies (one
goes into the container and the other returns to accounts receivable together with
the bill).
Completeness assertion:
5. Are sales invoice blanks pre-numbered?
Yes
The empty sales bills are pre-numbered and the series is verified.
6. Is the sequence checked for missing invoices?
Yes
The numerical series is verified by an accounts receivable clerk with any lost bills
accounted for and described.
7. Is the shipping document numerical sequence checked for missing bills of
lading numbers?
No
No reference to this control. This might create stock to be misstated.
Accuracy assertion:
8. Are all credit sales approved by the credit department prior to shipment?
Yes
All sales orders are authorized by a credit manager prior to further handling.
9. Are sales prices and terms based on approved standards?
No
Salesclerks write costs down (however are frequently incorrect because many
checks have demonstrated) on a sales form, which is after that moved to a sales

4. bill. Therefore errors move from one division to another and are transferred to the
client that makes a disparity in documented sales.
10. Are returned sales credits and other credits supported by documentation as to
receipt, condition, and quantity, and approved by a responsible officer?
No
No understanding of this control. Higher probability of scam when no
documentation is required nor authorization by a responsible official prior to
accounts receivable posts a credit to a client account.
11. Are shipped quantities compared to invoice quantities?
Yes
Inventory storekeeper deletes inventory as per bill, delivery workers verify order
prior to stuffing containers.
12. Are sales invoices checked for error in quantities, prices, extensions and
footing, and freight allowances, and checked with customers’ orders?
Yes
The accounts receivable clerk verifies several parts of the bill while verifying
numerical series.
13. Is there an overall check on arithmetic accuracy of period sales data by a
statistical or product-line analysis?
Yes
The general ledger supervisor analyzes month to month sales bill batches with the
accounts receivable control and sales income accounts.
14. Are periodic sales data reported directly to general ledger accounting
independent of accounts receivable accounting?
No

5. The general ledger supervisor reconciles account balances and verifies month to
month sales groups however both are made by the accounts receivable division.
This develops chance for scam since accounts receivable is involved in lots of
parts of the deal cycle.
Classification objective:
15. Does the accounting manual contain instructions for classifying sales?
Yes
Sales are documented by the accounts receivable division and coded into one of 3
product line income accounts.
Cutoff objective:
16. Does the accounting manual contain instructions to date sales invoices on the
shipment date?
No
Costs to accounts are to be made for the delivery date however no reference to
sales bills being dated for delivery date. This enhances the possibilities of wrong
entries to client accounts.
Flowchart
Revenue and Cash Receipts Cycle – Bridge Working Paper ICC
Index #
Control Activity
Audit Implications
Tests of Controls
Compensating Audit Procedures
S-1

6. Control on client order handling, incorporating defending of orders to avoid illegal
modifications.
Client orders are handled differently based upon the way of request (phone, mail,
and so on.) and several people might have access to them prior to they are
delivered to the credit manager.
Observation to observe what the sales atmosphere is like when the division is
hectic. Query to get info on client problems regarding orders.
In case observation and inquiry indicate weak points, utilize sampling methods to
get verification from clients regarding the happening and precision of orders.
S-1
Separation of jobs for sales and credit checks.
This separation exists, decreasing the likelihood of understating bad debts
expenditure.
Observation to observe the method utilized to verify customer credit and issue
authorization. Ask and see to verify the uniformity of credit checks. Reperformance
to ascertain in case the process utilized has flaws.
Utilize sampling methods to check in case credit checks are carried out
continuously when required and permission obtained for all sales.
S-1
Overseeing of the correctness of sales estimations.
The sales division makes estimations for clients that could have mistakes. In case
understated, the bill might not be flagged as requiring credit authorization.
Observation and reperformance to ascertain in case the method for making
estimations is suitable. Inquiry to verify overseeing for precision by management.
In case more research is required, utilize sampling ways to

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