Apollo Memo Essay

721 Words 3 Pages
Date: Mon, 21 JAN 2008 11:04:37 +0000
From: "Darlene Wardlaw" <DW@aow.cpa>
Subject: FW: Revenue Cycle Problems

Bradley sent me a copy of his test of controls work that he did on sales transactions. (Please tell him to send his work to you, rather than me.) Based on what Bradley found, there looks to be some serious problems in Sales and A/R. You need to write a memo identifying and explaining the significance of the qualitative features indicated by these deviations. Some things you may want to think about:

* If the control performance were uniform for the year, the deviations would be evenly distributed by month. * Apollo Shoes faced financial problems in the fourth quarter of the year. * Sales
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However, since there is a relatively small amount of sales transactions during the year, they should be able to confirm without a problem. I’ll talk to you about it more later. I don’t think you need to worry about customers with current zero balances.

For now, just write the memo to be placed in the accounts receivable workpapers (C-series) about the problems that Bradley found and their affect on our audit procedures (more extensive testing, positive confirmations, etc.).


Date: Mon, 21 JAN 2008 10:32:16 +0000
From: "Bradley Crumpler" <TheCrumpler@Aow.cpa>
Subject: Test of Controls
Attachment: <<Revenue Cycle Test of Controls.xls>> Of the 120 sales transactions you asked me to look at, I found 51 “deviations.” I have attached a list. These were the procedures that I used: * I randomly chose the sample of 120 transactions across the year with 10 from each calendar month. * I found all the invoices in the sample. None were missing. * All the invoices were properly posted to the general ledger sales and accounts receivable control accounts, and each was posted to the right customer’s individual account. * The invoices not listed had no deviations related to other documents, recalculations, or comparisons. * “No credit approval” means that the expected credit approval notation could not be found in the documents. * When “Wrong quantity billed” appears, a

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