Chapter 14 – figure 14-3: The auditor must identify the key internal controls and deficiencies for sales, also shown in Figure 10-5. These will differ for every audit because every client has different internal controls. The controls and deficiencies for Hillsburg Hardware Co. were identified from the flowchart in Figure 14-3 and the internal control checklist. The figure 14 – 3 is the flowchart of the sales and cash receipts function for Hillsburg Hardware Co. Firstly, order clerk Pam Dilley will receive customer order then this order is sent to president to approve. With the customer order was approved by president, Pam Dilley prepares sale order, she makes 3 copy of sale orders and she has total 1 customer order and 4 sales orders. First sale order is saved in alphabetical file; second sales order is transferred to SHIPPING department Harry Morton to prepare bill of lading; in DATA PROCESSING Virgil Gillings third sale order and customer order are used for keying sales transactions; order clerk sends the fourth sale order to customer. At SHIPPING department Harry Morton after preparing bill of lading, Harry Morton makes 3 copy of bill of lading and 1 sale order. First bill of lading and sale order are saved in numerical file; second bill of lading is sent to customer; third bill of lading is transferred to DATA PROCESSING Virgil Gillings; fourth bill of lading is carriered copy. Receptionist Receive checks, with the checks, Receptionist prepares prelisting to expose prelisting and checks. Prelisting is used in keying cash receipts transaction and saving automatically in Cash receipts transactions file; Cash receipts transactions file give out Cash receipts journal and prelisting and with this prelisting and checks, Deposit slip prepared then giving out 2 Deposit slip, prelisting and checks: the prelisting and first Deposit slip are saved in date file; second Deposit slip is sent to bank. In DATA PROCESSING Virgil Gillings, Informations in Cash receipts transactions file are updated and saved automatically on accounts receivable master file. Having system which saves sales transaction file. Informations in sales transaction file are used for printing reports and then record in sale journal. After printing reports, it has 3 invoice, 1 Sale order, 1 bill of lading and 1 customer order: Sale order, bill of lading, customer order, third invoice are saved in date file and it also have, first and second invoice are sent to customer. NOTEWORTHY: 1. All correspondence is sent to the president.
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