Gonzo is an online dating agency. Gonzo has been in business for 5 years and was able to reach revenues of $1 million last year. Given its recent expansion, Gonzo's shareholders have required that the company's financial statements be audited for the first time this year. You have been assigned to the audit team for this mandate.
The senior manager has asked you to review the process description for the sales of Gonzo. You need to identify the controls in place that could be tested and used for the audit and also identify any controls that might be missing and briefly explain the impact on the audit.
Gonzo's CEO has provided you with the following description of the company's processes and activities for the past year.
Sales
Gonzo's website is operational 24 hours per day. All of the sales for Gonzo are completed online when a customer opens a profile. Each customer pays $50 to open a profile and then pays $10 per month to keep his or her profile active. Most customers pay online with their credit cards and the sale is automatically recorded in Gonzo's sales ledger at the time of payment.
Gonzo also had a promotion for the last 3 months of the year: If a new customer subscribed for one year, they could pay $100 up front to keep their profile active for the full year instead of paying $10 each month for 12 months. This proved to be a popular sales tactic as customers enjoyed the $20 savings.
Website Security
In the past year, one hacker managed to compromise the website and stole the credit card information of 25 Gonzo customers. To ensure quality of customer service, Gonzo reimbursed a total of $10 000 to the customers to compensate them for the amounts that were stolen as a result of the intrusion on their website. Since then, Gonzo hired a third party, Mindster Box, to improve the security of their website. Mindster Box performs monthly updates to the security features and monitors any intrusion attempts. Gonzo has not had any website security problems since hiring Mindster.
Collection and Reconciliation
As most of the sales are done by credit card, Gonzo receives money from large credit card companies on a by-weekly basis. When money is received, Jo-Ann, the accounting manager at Gonzo, reconciles the details of the payments received from the credit card company to the sales ledger of Gonzo. Jo-Ann has often complained that this is nearly impossible to do since Gonzo's accounting system keeps track of the payment by the website user name, which is often very different from the actual name of the person as stated on the detailed report provided by the credit card company. Jo-Ann therefore mostly relies on the statement of the credit card company to record and adjust revenues reported by Gonzo.

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The Answer of Gonzo is an online dating agency. Gonzo has been in business for 5 years and was able to reach revenues of $1 million last year. Given its recent expansion, Gonzo's shareholders have required that the company's financial statements be audited for the first time this year. You have been assigned to the audit team for this mandate.
The senior manager has asked you to review the process description for the sales of Gonzo. You need to identify the controls in place that could be tested and used for the audit and also identify any controls that might be missing and briefly explain the impact on the audit.
Gonzo's CEO has provided you with the following description of the company's processes and activities for the past year.
Sales
Gonzo's website is operational 24 hours per day. All of the sales for Gonzo are completed online when a customer opens a profile. Each customer pays $50 to open a profile and then pays $10 per month to keep his or her profile active. Most customers pay online with their credit cards and the sale is automatically recorded in Gonzo's sales ledger at the time of payment.
Gonzo also had a promotion for the last 3 months of the year: If a new customer subscribed for one year, they could pay $100 up front to keep their profile active for the full year instead of paying $10 each month for 12 months. This proved to be a popular sales tactic as customers enjoyed the $20 savings.
Website Security
In the past year, one hacker managed to compromise the website and stole the credit card information of 25 Gonzo customers. To ensure quality of customer service, Gonzo reimbursed a total of $10 000 to the customers to compensate them for the amounts that were stolen as a result of the intrusion on their website. Since then, Gonzo hired a third party, Mindster Box, to improve the security of their website. Mindster Box performs monthly updates to the security features and monitors any intrusion attempts. Gonzo has not had any website security problems since hiring Mindster.
Collection and Reconciliation
As most of the sales are done by credit card, Gonzo receives money from large credit card companies on a by-weekly basis. When money is received, Jo-Ann, the accounting manager at Gonzo, reconciles the details of the payments received from the credit card company to the sales ledger of Gonzo. Jo-Ann has often complained that this is nearly impossible to do since Gonzo's accounting system keeps track of the payment by the website user name, which is often very different from the actual name of the person as stated on the detailed report provided by the credit card company. Jo-Ann therefore mostly relies on the statement of the credit card company to record and adjust revenues reported by Gonzo.

Gonzo Is an Online Dating Agency