You are on page 1of 4


Assertions and Controls Possible Misstatements Procedures to be Done

Recorded sales are for actually made to

1. Recording of shipments does not Goods dispatched may not agree Inquire the person in-charge for
have any records of costumer with goods ordered. shipping goods.
orders, sales orders approved by Sales may be made to Examine charge sales invoices.
the owner, and no need for unauthorized customers.
approved shipping documents. Examine a sample of original
2. A charge sales invoice is issued to Invoices maybe made for sales invoices to determine whether
sales transaction that requires fictitious transactions. each one has a shipping document
shipments. It is attached on the (way-bill/bill of lading) attached.
delivery package; to be received
and verified by the costumer. The
original copy is keep as basis
forcollection/payment. Compare a sample bill of lading
3. The way-bill/bill of lading from Shipped goods appearing in the to its charge sales invoice.
the shipper is obtain in order to documents may differ to what was
keep record and trace the actually delivered by the company.
product. Observe procedures and inspect
4. For deliveries within the city, the Product/s delivered might documents pertaining to deliveries.
drivers will be given a copy of the include other products not listed in
Sales Invoice where the costumer the invoice.
will sign upon receiving the
product/s. It will be returned to Mistakes in delivery may not be
the Accounting department as a discovered within the period.
proof that the goods were already
5. Sold goods that are still on display A product can be sold twice to
are label with a note SOLD to: another costumer.

Cash receipts recorded in the accounts

represent cash received from
costumers during the period.

1. A clerk records the accounts

receivable, prepares and mails Observe and make inquiries
monthly statements to costumers Errors in recording sales on about the performance of various
for trade accounts receivable and account may not be detected. functions.
follows up on any Inquire by sending letters to a
complaints.He/She is the also the Made-up receivables may exist. sample of accounts receivable
one who collects payments. customers to verify whether they
2. A collection receipt is issued when Collection for payment may be have an outstanding balance at
payment is received and it is then recorded as sales for the current December 31, 2015.
attached to the charge invoice for period.
Sales adjustment transactions
recorded in the accounts represent
discounts, returns and allowances,
and bad debts applicable to the
1. Sales clerk are oriented to give
discounts to the extent imposed by Observe procedures and examine
the management. Large discounts follow-up lines.
are communicated to the manager Improper judgement on the
(in the absence, the accounting discounts given may affect sales Inquire information on the
department). significantly. process and conditions when a
2. Sales returns and allowances are costumer returns the product
communicated between the selling and/or asks for allowance.
department and the costumer.
Agreed terms are then carried out Existing illegal terms Review the entitys records on
and then communicated to the communicated between parties the costumers account. Inspect on
accounting department. may not be discovered. the trends in bad debts.
3. The receivables from costumers
will be deemed uncollectible if
within 1 year, they cant still pay.
The person-in-charge may write-
off wrong accounts.

All sales transactions that occurred
are recorded. Observe and make inquiries
1. Pre-numbered charge sales invoices Some sales may not be invoiced. about the use of pre-numbered
are accounted for to determine that documents and inspect evidence of
sales are recognize.
accounting for the sequence.
2. Pre-numbered cash sales receipts
Erroneous receipts issued may For a sample of shipping
are accounted for to determine that
not be detected immediately. documents selected from shipping
cash sales are recorded.
3. All records on sale are being records, trace each shipping
Some sales would not be posted
inputted in their information on the document to a transaction recorded
in the information system.
basis of their issued invoices (charge in information system.
sales invoice and cash sales invoice).
All cash received from the costumer
during the period are recorded as cash
receipts in the account.
1. Pre-numbered collection receipts
Collections may be posted to the Review on the records of the
are accounted for to acknowledge costumers payments (collection
wrong costumer account.
payment of credits by the
receipts) and match it to the charge
sale invoices made.

All sales, cash receipts and sales
adjustments are properly recorded.
1. Their receipts and invoices are Sales may have incorrect prices. Vouch recorded sales to
their source of information on supporting documents.
sales made during the period. Fictitious sales transactions may
be recorded.
All sales, cash receipts and sales
adjustments are properly recorded in
the current period and those arising
after the period end are included in Examine sales invoices for the last
the next accounting period. five sales transactions recorded in
1. Procedures to ensure timely Sales occurring during the the information system in 2015 and
recording of sales and proper cut- period may not be record for the examine shipping documents to
off are established. year but would be recorded for the determine they are recorded in the
next year. correct period.

Rights and Obligations

Sales recorded represent only sales
transactions. Obtain a copy of MOA. Inspect
1. Clerk checks sales invoice for terms and understand the terms that have
determine that transactions is a Wrong judgement towards significant effects on the sales
sale rather than a consignment. recognition of sales maybe given. transactions cycle.
2. It has Memorandum of Agreement Understand the nature of the
(MOA) to its consignee to properly sales and observe on how
agree on terms and conditions on consignment transactions are
sales. treated.

Sales are correctly billed and recorded.
1. For all goods to be shipped, the More or fewer goods may have Observe procedure. For a
sales clerk is assigned to check on been shipped than ordered. sample, examine signature on
the products to be delivered Customers returns may occur. documents evidencing performance.
and/or to be shipped if it
corresponds to what is recorded
in the invoice.
2. On rare cases, the company Some costumers will receive Inquire and examine sales credit
accepts sales on account from the favor on their credit terms and for selected transactions.
friend of the owner. Costumer selling price. Accounts receivable
credit is approved by the manager may be uncollectible.
Inquire on the person in-charge
3. There is no authorization needed Sales may be made to of making shipments.
from the manager prior to unauthorized customers.
merchandise shipment. Observe procedure. Inquire on
their standard discounts given and
4. Sales invoices are reviewed by the Large variance on cost and compare to what was actually given.
purchasing officer for proper selling price might occur.
pricing and discounts.
Observe procedure. Check on the
5. Sales transactions are directly information system used.
recorded in the information Mistakes in recording in the
system. It doesnt maintain a information cannot be traced from
ledger. other records. Errors in accounts
receivable increases.
Assertions and Controls Possible Misstatements Procedures to be Done


Assertions and Controls Possible Misstatements Procedures to be Done

ACCOUNT TITLE: Accounts Receivable

Assertions and Controls Possible Misstatements Procedures to be Done

ACCOUNT TITLE: Accounts Payable

Assertions and Controls Possible Misstatements Procedures to be Done


Assertions and Controls Possible Misstatements Procedures to be Done