System informs customer of current inventory and

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System informs customer of current inventory and likely delivery date o Generate back order List of back-ordered items must be maintained to meet customer  demand and future inventory needs o Obtain credit approval Credit manager reviews sales orders and customer credit information o Prepare shipping and packing documents Separate packing slips will be prepared Picking ticket:  documents that tell the warehouse personnel he most  efficient sequence in which to pick items for shipment and the  location of all items to be shipped; only quantity o Ship and verify shipment of goods Accompanied by a bill of lading Bill of lading:  third-party shipping document; describes the  packages to be conveyed by the common carrier to the customer,  the shipping terms and the delivery address; conveys responsibility  to the shipper Shipping department completes the packing slip o Prepare invoice Prepared when confirmation of goods shipped is received
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Auditing revenue and related accounts  15:19 Controls should ensure that the invoice corresponds with the sales  order  o Send monthly statements to customers o Receive payment  Audit steps for an integrated audit Continually update business risk and fraud risk factors ; update audit  planning for new risk information Analyze potential  motivations  to misstate sales, as well as the existence of  other fraud indicators and determine the most likely method for sales to be  misstated Perform preliminary analytical  procedures to determine if unexpected  relationships exist in the accounts and document how the audit testing should  be modified because of the unusually relationship  Develop an understanding of the internal controls in the revenue cycle that are  designed to address the risks identified on the three previous steps, including  the applicability of entity level controls to the revenue cycle. This  understanding will include a review of the client’s document of internal  controls Determine the important controls that need to be tested for the purpose of 1)  formulating an opinion on the entity’s internal controls and 2) reducing  substantive testing for the financial statement audit Develop a plan for testing internal controls and perform the tests of key  controls in the revenue cycle Analyze results.  o If deficiencies are identified, to determine significant deficiencies or  material weaknesses. Determine whether the preliminary control risk  assessment should be modified (should control risk be assessed at a  higher level?) and document the implications for substantive testing. 
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