- 25 Marks
AA – L2 – Q32 – Internal Control Systems
Specify control objectives for revenue cycle stages (order processing, despatch, return) and explain their importance. List internal controls for a manual revenue cycle system to achieve control objectives.
Question
When considering the internal controls in a revenue cycle, the auditor will need to consider the following stages:
- the processing of orders; and
- the despatch and return of goods
Required:
(a) Specify the control objectives for each of the above stages in a revenue cycle where all sales are made on a credit basis and explain their importance.
(b) List the internal controls you would expect to see in place in a simple manual system in order to achieve those objectives.
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