Page 11 - eBook Audit Of Financial Statement Components

1.1 THE ACCOUNTING SYSTEM AND CONTROL
ACTIVITIES FOR REVENUE

Figure 1.1: Narrative of Example of the Sales System

The auditor Orders are received over phone and in written form.

should
Orders are processed by sales order clerk.
ascertain the
Order exceeding the limit given are approved by the
internal control Sales Manager before the order is accepted.

systems of the Approved orders are then passed to the store for
allocation of goods for dispatch. A good delivery note
company and
(GDN) is issued. Goods are normally delivered within
identify the key 3 days of acceptance of orders.
Prices are based on a fixed price list and are
control features
determined by management.
for testing the

effectiveness of Invoices are issued when the acknowledged copy of
GDN is returned from the customers. Invoices are
those system.
referenced to orders and GDNs.

Collection from customers is done by the Accounts
Documentation Department. Credit term and limits are approved by
the Sales Manager
of the systems

could be in

narrative form
FIGURE 1.2: Sales and Receivable Functions
or flow chart

form.
Recording the
Approving Filling and
Customer Invoicing sales-Sales
place order- credit-Credit delivering customers- journals,
Order form policy and sales order - sales invoice accounts and
authorization Bill of lading
records

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