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1) The matching of GDN to an sale invoice ensures that for all goods dispatched an invoice has been raised. if this is not the case sales and trade receivables may be understated.
Could you please give one control which ensures that sales and trade receivables are not understated?
2) sometimes direction of the test is important. E.g. we are not going to test the same thing if we match sample of GRN/GDN to orders and if we match sample of orders to GRN/GDN. Could you please explain this by giving some examples?
Many thanks in advacne.
1
If all GDNs have an invoice this implies that sales have been accounted for. Controls that could be carried out by the client and tests by the auditor are:
Analytical procedures
Pre-numbered despatch notes and ensure that all are accounted for
Tracing orders received before year end to see when the despatch was made.
2
If you trace from sales invoices to receipts in the cash book you are obtaining information that the sales were real.
If you trace receipts in the cash book to sales invoices you are obtaining information that the cash arose because of a sale (and not, for example, new capital or money laundering)
1
If all GDNs have an invoice this implies that sales have been accounted for. Controls that could be carried out by the client and tests by the auditor are:
Analytical procedures
Pre-numbered despatch notes and ensure that all are accounted for
Tracing orders received before year end to see when the despatch was made.
2
If you trace from sales invoices to receipts in the cash book you are obtaining information that the sales were real.
If you trace receipts in the cash book to sales invoices you are obtaining information that the cash arose because of a sale (and not, for example, new capital or money laundering)
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