Saturday, July 26, 2014

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Procedural Audit Advantages And Disadvantages - The Procedural Audit Checklist For Purchases and Sales Verification

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The procedural audit unit in every business organization is a unit saddled with the responsibility of ensuring that the totality of all the policies and procedures adopted by the management in relation to purchase, sales and accounting are strictly adhered to.

As it relates to purchases, the standard operating procedures for the procedural audit department in the post audit verification process includes the following:

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[Post Image Courtesy of Stuart Miles at FreeDigitalPhotos.net]

• Checking that the invoices are correctly coded according to the ledger accounts classification.

• Verifying that appropriate acknowledgements (such as initials and signatures) appears accurately on each of the purchase documents presented.

• Verifying that each correct invoice has been passed for payment.

• Checking that each invoice is entered into the invoice register.

• Checking that each invoice has been posted to the purchases ledger account.

• Investigating into the nature of outstanding orders.

• Enquiring into unprocessed invoices.

• Checking additions contained in the invoice register.

• Confirming if the purchase invoice register is in arrangement with the purchases accounts total.

In relation to sales, the audit objective is to ensure that sales proceeds are deposited into the bank account, that all Loading Order Forms and invoices are accurately prepared, properly authorized and recorded in the books of accounts to avoid understatement or overstatement of sales and delivery made to customer. However, the following substantive procedures will be applied:

»» BEFORE (PRE) SALES:

• Confirm customer's payment through bank deposit from the ggroup head of finance.

• Confirm and ensure that the account paid covered the quantity and value of Goods written in the Loading order Form, which must also be seen on the invoice.

• Check that the invoice are properly authorized.

• Check pricee charged with official price list.

• Confirm that the actual quantity and specifications are loaded to the customers.

»» AFTER (POST) SALES:

• Check that all sales invoices are recorded.

• Check entries in sales day book with invoices and credit notes.

• Verify that the functions of recording sales, maintaining customer accounts and preparing statements of accounts are well segregated.

• Match sales invoices with Loading Order Form.

• Match cash receipts with invoices.

• Verifying that sales returns and adjustments are properly authorized and recorded.

• Verify that there are proper cut-off procedures and duly complied with.

• Verify that there are proper safeguards to ensure that debtors statements of account cannot be altered before dispatch.

• Verify that writing-off of bad debts are properly authorized.

• Trace sales invoices to summaries.

• Check summary totals to sales ledger control accounts.

• Check additions in the sales ledger control accounts.

• Confirm that sales report is adequately presented in the monthly report to the management.

• Check for completeness of sales invoice by enquiring into missing numbers.

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1 comment:

  1. informative Blog!Advantages and disadvantages of auditing are mention here,topic is very clear to visitor. Cyprus auditors

    ReplyDelete

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