The auditor has determined that a key control in the audit of the sales and collection cycle is that recorded sales are supported by authorized shipping documents and approved customer orders.What typical test of controls should be used in this situation?
A)Examine a sample of duplicate sales invoices to determine that each on is supported by an authorized shipping document and approved customer order.
B)Observe whether shipping documents are forwarded daily to billing and observe when they are billed.
C)Examine a sample of sales invoices and agree prices to the authorized computer price list.
D)Use audit software to trace postings from the batch of sales transactions to the subsidiary and general ledgers.

Question

Quizplus · Accepted Answer

Examining a sample of duplicate sales invoices and verifying that each one is supported by an authorized shipping document and approved customer order allows the auditor to test the control in question directly. Option B relates to the control over billing of customers and is not directly related to the control over sales documentation. Option C is related to price accuracy and not to the control over sales documentation, and option D relates to the use of audit software to perform substantive testing rather than to test of controls. Therefore, option A is the best choice.

The Auditor Has Determined That a Key Control in the Audit