Sample content Learning Team Assignment: Internal Control Audit – Apollo Shoes ACC 491 ICQ for Apollo Shoes Assertions and Questions Yes, No, N/A Comments Occurrence assertion: 1. Is the credit department independent of the sales department? yes The sales clerks are part of the marketing department although the orders need to be presented to the credit manager which is part of the treasury department. 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 completed by multiple groups are completed by different company policies and procedures. 3. Is access to sales invoice blanks restricted? yes Invoiced sales are completed by the billing department and are further removed on a case to case basis. 4. Are pre-numbered bills of lading or other shipping documents prepared or completed in the shipping department? yes The ship

1. ACC 491 Week 4 Learning Team Assignment Apollo Shoes Case Assignment (1)
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Sample content
Learning Team Assignment:
Internal Control Audit – Apollo Shoes

2. ACC 491
ICQ for Apollo Shoes
Assertions and Questions
Yes, No, N/A
Comments
Occurrence assertion:
1. Is the credit department independent of the sales department?
yes
The sales clerks are part of the marketing department although the orders need to
be presented to the credit manager which is part of the treasury department.
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 completed by multiple groups are completed by different company
policies and procedures.
3. Is access to sales invoice blanks restricted?
yes
Invoiced sales are completed by the billing department and are further removed on
a case to case basis.
4. Are pre-numbered bills of lading or other shipping documents prepared or
completed in the shipping department?
yes

3. The shipping department applies pre-numbered bill of lading forms along with a
second copy that is attached to accounts receivable with every invoice.
Completeness assertion:
5. Are sales invoice blanks pre-numbered?
yes
Blank sale invoices are previously numbered and the sequence of which is
checked.
6. Is the sequence checked for missing invoices?
yes
The appointed numerical sequence is then applied to an accounts receivable clerk
who then acknowledges any missing invoices along with accounts that have
expired.
7. Is the shipping document numerical sequence checked for missing bills of
lading numbers?
No
There is no observation of this control. This is probably the reason why the
inventory can potentially be misstated.
Accuracy assertion:
8. Are all credit sales approved by the credit department prior to shipment?
yes
Sales orders in general must be authorized by a credit manager before any further
processes.
9. Are sales prices and terms based on approved standards?
no

4. Sales clerks record prices but are often wrong as several tests have shown and
the results presented in the sales invoice. Due to this, there are common mistakes
with particular invoices which are then turned into mistakes on the actual recorded
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
I am not familiar with this type of control. There is a likelihood of fraud because no
documentation is needed or approved by a responsible officer prior to accounts
being accepted or approved by accounts receivable.
11. Are shipped quantities compared to invoice quantities?
yes
The Inventory storeskeeper eliminates inventory based on invoices, shipping
employees, and the verification of packages before their packed into boxes.
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 multiple aspects of the invoice as they
check that the numerical sequences are accurate.
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 compares monthly sales invoices to accounts
receivable control and sale revenue accounts.
14. Are periodic sales data reported directly to general ledger accounting
independent of accounts receivable accounting?

5. No
The general ledger supervisor reconciles account balances and checks monthly
sales batches but both are equally established by the accounts receivable
department. This allows fraud to be detected because accounts receivable is also
involved in various aspects throughout the transaction cycle.
Classification objective:
15. Does the accounting manual contain instructions for classifying sales?
yes
Sales are reviewed by accounts receivable department and documented as one of
the three product line revenue accounts.
Cutoff objective:
16. Does the accounting manual contain instructions to date sales invoices on
the shipment date?
no
Any charges to the account are subjected to shipping dates not related to sales
invoices and are dated according to the shipping date. This increases the chances
that incorrect entries of customer accounts.
Flowchart
Revenue and Cash Receipts Cycle – Bridge Working Paper ICC
Index #
Control Activity
Audit Implications
Tests of Controls
Compensating Audit Procedures

6. S-1
Control over consumer order processing, includes a safeguard for preventing any
unauthorized changes.
Customer orders are completed different compared to processes such as
telephone, email, etc. Furthermore, there are numerous individuals that have
access to these utilities immediately before they are forced to share information
with a credit manager.
Acknowledge to determine how the sales environment is like when the department
is busy. Search customer information to discover customer complaints about
orders.
Assuming observations and inquiries show weaknesses, sampling techniques are
applied in order to gather information from customers in relation to occurrence and
accuracy of orders.
S-1
Segregation of responsibilities for sales and credit checks.
This type of segregation is present, reducing the risk of making bad debts and
creating unnecessary expenses.
Acknowledge various observations to determine what processes are used to
determine customer credit and issue their following approval. Make inquiries in
order to check the consistency of credit checks. Finally, evaluate the processes to
determine the weaknesses.
The use of sampling techniques in order to test whether or not credit checks can
be completed to constantly determine authorized, obtained sales.
S-1
Evaluation of sales, estimates, and their accuracy.
The sales departments complete estimates for their clients, which could potentially
contain errors. Lack of this results in invoices not being flagged when credit is not
approved.

7. Ob
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