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Ken Garrett.
Ken Garrett.-
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tinaboy
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One of the objectives of testing controls in an entity’s sales system is to ensure that the record of sales made represent the goods and services provided .To my understanding the assertion under test here could be occurance or existence .An auditor must review the entity ‘s accounting for a numerical sequence of invoices as a test of control.however what I am trying to understand is what exactly are the implications of missing invoices .During the investigation of missing invoices some sources are saying the cancelled invoice must have been initialled by the customer.what does this mean ?What else should the auditor expect to see on cancelled invoices sir?For a moment I thought evidence that a senior member of staff has acknowledged the cancellation and also a separate written statement signed the person who authorized the cancellation .will this this be correct as well.
Ken Garrett
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Missing is not the same as cancelled.
If an invoices and all its copies are missing the suspicion is that sales have been made, a customer invoiced but that the sale and receivable have not been recorded. Therefore sales and receivables might be incomplete.
Of course, someone could simply have thrown the invoice away if it had been an error, but without that document you don’t know.
The correct way to cancel a sale that has already been invoiced is to issue a credit note (like a negative invoice). There should be strict control over issuing credit notes and these should certainly be authorised by a manager as a credit note effectively says that the customer doesn’t have to pay the invoice.
I don’t understand the bit about custoemrs having to initial invoices that have been cancelled. Invoices are posted out and they stay with the customer.
tinaboy
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