The following are misstatements that can occur in the sales and collection cycle
ID: 2542236 • Letter: T
Question
The following are misstatements that can occur in the sales and collection cycle:
Misstatements
1. A customer number on a sales invoice was transposed and, as a result, charged to the wrong customer. By the time the error was found, the original customer was no longer in business.
2.
1A former computer operator, who is now a programmer, entered information for a fictitious sales return and ran it through the computer system at night. When the money came in, he took it and deposited it in his own account.
3.
A nonexistent part number was included in the description of goods on a shipping document. Therefore, no charge was made for those goods.
4.
A customer order was filled and shipped to a former customer, that had already filed for bankruptcy.
5.
The sales manager approved the price of goods ordered by a customer, but he wrote down the wrong price.
6.
A computer operator picked up a computer-based data file for sales of the wrong week and processed them through the system a second time.
7.
For a sale, a data entry operator erroneously failed to enter the information for the salesman's department. As a result, the salesman received no commission for that sale.
8.
Several remittance advices were batched together for inputting. The cash receipts clerk stopped for coffee, set them on a box, and failed to deliver them to the data input personnel
Requirements
a. Identify the transaction-related management assertion(s) to which the misstatement pertains.
b. Identify one automated control that would have likely prevented each misstatement.
Misstatement
Requirement A Choices Has 9 options Requirement B Has 6 options
Transaction Related Management Assertions Computer Based Control
Accuracy Check digital
Classification Scheduling of computer processing
Completeness Conversion verification
Completeness / Accuracy Cutoff procedures
Completeness / Cutoff Preprocessing review
Cutoff Control totals reconciled to manual
Occurrence / Accuracy
Occurrence / Cutoff
1. A customer number on a sales invoice was transposed and, as a result, charged to the wrong customer. By the time the error was found, the original customer was no longer in business.
2.
1A former computer operator, who is now a programmer, entered information for a fictitious sales return and ran it through the computer system at night. When the money came in, he took it and deposited it in his own account.
3.
A nonexistent part number was included in the description of goods on a shipping document. Therefore, no charge was made for those goods.
4.
A customer order was filled and shipped to a former customer, that had already filed for bankruptcy.
5.
The sales manager approved the price of goods ordered by a customer, but he wrote down the wrong price.
6.
A computer operator picked up a computer-based data file for sales of the wrong week and processed them through the system a second time.
7.
For a sale, a data entry operator erroneously failed to enter the information for the salesman's department. As a result, the salesman received no commission for that sale.
8.
Several remittance advices were batched together for inputting. The cash receipts clerk stopped for coffee, set them on a box, and failed to deliver them to the data input personnel
Explanation / Answer
Please find answer as below.
Sr No Particulars Transaction related management assertion Automated Control which would have prevented misstatement 1 A customer number on a sales invoice was transposed and, as a result, charged to the wrong customer. By the time the error was found, the original customer was no longer in business Occurrence/ Accuracy 2 1A former computer operator, who is now a programmer, entered information for a fictitious sales return and ran it through the computer system at night. When the money came in, he took it and deposited it in his own account. Control Check digital 3 A nonexistent part number was included in the description of goods on a shipping document.Therefore, no charge was made for those goods. Completeness / Accuracy Control totals reconciled to manual 4 A customer order was filled and shipped to a former customer, that had already filed for bankruptcy Control Conversion verification 5 The sales manager approved the price of goods ordered by a customer, but he wrote down the wrong price. Accuracy Control totals reconciled to manual 6 A computer operator picked up a computer-based data file for sales of the wrong week and processed them through the system a second time. Occurrence / Cutoff Cutoff procedures 7 For a sale, a data entry operator erroneously failed to enter the information for the salesman's department. As a result, the salesman received no commission for that sale Completeness Preprocessing review 8 Several remittance advices were batched together for inputting. The cash receipts clerk stopped for coffee, set them on a box, and failed to deliver them to the data input personnel Occurrence / Accuracy Computer BasedRelated Questions
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