GROUP 11 TECHWEAR

Part 2 of the Audit Project

AUDIT DATA ANALYSIS PLANNING TEMPLATE

Auditing
Assertion objectives What could go wrong? Mitigating controls Data analysis auditing procedures Data requirements

Accounts receivable – account balance

Existence Amounts An order is placed and a Debits to accounts Compare debits to accounts receivable Sales amounts
reported in the receivable is recorded without receivable are only against recorded sales.
financial any product being shipped. generated from the order Cash receipt amounts
statements entry system. Review and test subsequent receipts.
represent valid Customer names
receivables. Evaluate proper segregation of duties by
examining postings by source and preparer Transaction dates
(e.g., sales only entered by authorized
salesclerk). Transaction numbers

General ledger postings by

preparer and source (e.g., order
entry)
 A shipping number and
FedEx identification
number are entered into
the system as evidence of
order fulfillment and
discrepancies are
investigated.
Verify that every sales transaction has a Customer names
shipping number and FedEx identification
number. Transaction numbers
Analyze gross margin percentage trends by Shipping numbers
month and by customer.
FedEx ID numbers
Sales amounts

Cost of goods sold amounts

Transaction dates

Completeness Every item that Sales have occurred and will not Inspection of records of
should be be recorded properly documents.
included in the
financial
statements is
included.

Valuation and Amounts Reperformance

allocation presented
include fair
obligations

Classification and All AR AR obligations will not be Internal application control Perform test of controls of application Sales Type
understandability obligations are properly classified in the in AR system control over AR system.
properly accounts Transaction numbers
classified
Sales amounts

Sales – class of transactions

Occurrence Amounts An order is placed and a sale is A shipping number and Verify that every sales transaction has a Customer names
reported in the recorded without any product FedEx identification shipping number and FedEx identification
financial being shipped. number are entered into number. Transaction numbers
statements the system as evidence of
represent valid order fulfillment and Shipping numbers
sales. discrepancies are
FedEx ID numbers
investigated.
Sales amounts

Completeness Only shipped Products are shipped and not Shipping number and Verify that every sales transaction recorded Customer names
products are properly recorded as sales Fedex ID are entered in has a shipping number and Fedex ID
recorded as the system Transaction Numbers
sales
Shipping numbers

Fedex ID Numbers

Sales amounts

Accuracy Amounts billed Products are shipped and billed Analyze receipts and invoices. Transaction numbers
are agreed upon at incorrect prices
prices

Cutoff Amounts Amounts could be recorded in Verify the Fedex shipping date against the Fedex ID
reported in the the wrong period invoice date.
financial Fedex Shipping Date
statements
represent sales Invoice Date
transactions that
took place in the
current year
 Classification All sales Transactions that do not qualify Internal application Perform test of controls on application Sales amounts
transactions are for revenue recognition are controls over order entry controls over order entry system.
properly improperly recorded as sales system COGS amounts
classified in their
respective
accounts

Problem 1
Problem 2)
Problem 3)
Problem 4)
Problem 5)
Problem 6)
 Summary

When you analyze the information given on TechWear Shipping Department, a shipping number is created and assigned to
order once it is released for shipping. The shipping number assigned should be the same as the transaction number. Likewise, to retain
accuracy in the records corresponding shipping to Fedex, we implemented a count function to confirm all balances. This resulted in all
shipments being accounted for. In the process, we noticed that there were times that the transaction numbers were not associated with
a corresponding shipping number. Due to the fact they had not been shipped yet, therefore the accounts receivable and sales accounts
needed to adjusted respectively. In order to identify any transactions without matching shipping numbers, we used formatting to
highlight any duplicate values. In the process, we were able to identify and account a total of 41 transactions. These transactions
totaled an amount of $1,751,911.73. In conclusion, we recommend that TechWear should adjust its sales account and accounts
receivable respectively:

Sales: $1,751,911.73 Account Receivable: $1,751,911.73

In order to make sure the all the shipping numbers were matching the records of the recorded sales transaction, we crossed
checked all the shipments with the transaction numbers. We did cross checks both from shipping to transaction and from transactions
to shipping. This would allow us to verify all shipping numbers were unique with no duplicates and that any transaction that was paid for
was actually shipped. We realized during the procedure when filtering the transaction column that some shipping numbers were
missing. Thus, some orders were not shipped out. When we filtered out the shipping number column, there were not any missing
transaction numbers; therefore, all shipments had conforming orders. We believe this is the most accurate method for the audit. No
adjustments were necessary because all shipments have conforming transactions numbers, and some transactions are pending
shipment.
Group Evaluation Form

Names Signatures % of total effort (must sum to 100%)

Deisy Torres

28%

John Diaz 24%

Lovedeep Singh

24%

Kreshnik Hoxha

24%