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Hi
If there is a weakness in control system that any discount has to be manually entered by clerk on invoice, so can its explanation be that this may result in errors and customers may get wrong invoices leading to customer dissatisfaction?
And its control that manual entry should not be allowed and if allowed it should be authorized by seniors?Not only dissatisfaction – if discounts are misapplied so the customer is overcharged, the customer may dispute the invoices and not pay them – leading to potentially irrecoverable debts. If a customer is undercharged they might be quite happy about that – but the company would lose revenue. To “not allow” something is incomplete as a suggestion of control – you would need to say what should be done instead – for example, that the giving of discounts should be automated in the invoicing system (e.g. in the customers’ master files). These changes to the standing data would need to be authorised.
As you say, if the system didn’t cater for this, there would need to be some independent check to confirm that the correct discount has been applied.So for explanation of deficiency would it be correct to say just that clerk could forget to manually enter the discount or enter an incorrect level of discount for a customer, leading to the sales invoice being overstated and
a loss of customer goodwill?And its control that The invoicing system should be amended to prevent sales clerks from manually entering sales discounts
on invoices?Can you please tel me an appropriate test of control for the control which I have suggested?
The control you suggested would be better stated as The invoicing system should be amended to apply the discounts automatically [hence removing the need for manual entry] and a test of control might be to use test data.
So by test data, can I elaborate and write that “enter a dummy manual entry for discount , system should reject the entry”?
OR more appropriate that “Ask any clerk to enter a dummy manual entry for discount , system should reject the entry”?
You are still focusing on not making manual entries rather than the recommendation that discounts should be automated. If previously there was a discount field for data entry – but now there’s not – a clerk can’t try to enter a discount for the system to reject.
The results of processing test data (selected by the auditor) should confirm that discounts have been correctly applied to those customers who are authorised to receive them (according to the standing data that is held).So for its TOC I shall just write that “Perform test data to ensure that discounts have been correctly applied to those customers who are authorized to receive them according to the standing data that is held” Right?
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