February 10, 2012
Santos Alarcon Jr.
To: Review File
CC: Santos Alarcon, Junior.
Coming from: B Team
Re: Apollo Accounting and Control Systems: Revenue and Collection Circuit Details of Control Issues Found in the Income and Collection Cycle
Goals: Apollo's control procedures had been tested to have control proof about the validity, consent, accuracy, and proper period recording of recorded revenue. The accuracy and reliability of category of revenue postings to individual consumer accounts receivable was as well tested. Devices tested included authorization, segregation of tasks, information control controls, including general, software, and controls over the economical reporting procedure, physical handles, performance evaluations, and handles over administration discretion economic reporting. Each of our objective was to perform enough in-depth auditing to provide peace of mind about mistakes and scam in the accounts. The internal controls were tested for effectiveness using samples of transactions. This is done in compliance with examine standards. Results: The income cycle test out of controls for 12 months end 3 years ago resulted in fifty-one deviations of 120 test transactions. 12-15 of those orders resulted in credit rating memos pertaining to inaccurate charges or volumes billed. Virtually all credit memos were highly processed in the third quarter and none were processed inside the first half the year. thirty-one had simply no credit authorization of which 12 are exceptional at the time of this examine. The total spectacular invoices with no credit acceptance total over $27 , 000, 000. Several expenses of lading were absent and one or two arithmetic mistakes were made. Response: The unreliability of Apollo's revenue and accounts receivable controls required the taxation team to complete more comprehensive testing. Confident or negative confirmations were needed of all accounts. Apollo customers were asked to verify total sales during the year if certainly not current in the date of the audit. The finding that all credit memos processed had been in the second half of the season indicate that control procedures were not uniform for the season. Additionally , 12 , deviations are potential reason for misstatement inside the financial claims. Management is advised to put into practice and adhere to control procedures throughout the year. Credit approval is usually not being performed as required and ends in collection concerns. Credit acceptance and timely collection types of procedures will reduce the financial complications as looked in the fourth quarter. Lacking bills of lading, substantial arithmetic problems with postpone in static correction, and deviations resulting in credit rating memos intended for overcharges simply (no undercharge errors found) are warning for potential fraudulent deals. The missing bills of lading recommend improperly noted sales, the possible lack of mixture of as well as under costs, and the lag time between problems and credit memos happen to be suggestive of misstatement and perhaps fraudulent activity. Recommendations: Bridge working documents summarize Apollo's strengths and weaknesses. Apollo is advised to implement and maintain effective control procedures that may be adhered to all year round. Some recommendations include:
* Pre-numbered bills of lading with location and explanation of missing BLs determined. * Credit approvals should be done for each and every transaction in spite of history or perhaps size. * Sales purchases should be properly secured properly and numbered reducing the risk lacking or changed sales requests. * Make an electronic personal such as a PIN number for phone orders to make sure that the customer placing the order is responsible for payment. 2. Payment conditions should be suggested to consumers at time of purchase. 5. Collection types of procedures should be integrated to increase cashflow. * Revenue invoices needs to be checked for error in quantities, prices, extensions and footing, and freight allowances, and checked with consumers' orders to lessen the...
Sources: University of Phoenix, Apollo's Shoes Case; Retrieved from: https://ecampus.phoenix.edu
Boynton, W. C., & Manley, R. In. (2006). Modern auditing: Peace of mind services and the integrity of financial reporting. (8th ed. ). Hoboken, NJ: Wiley.
Apollo Shoe Case вЂ“ Due Week #41. Interior Control Questionnaire Possible Items: 1 . 75Earned points 1 . 75 1 . Bridge Job paper вЂ“ Revenue CyclePossible Points: 1 ) 75Earned details 1 . seventy five 2 . Connection Work conventional paper вЂ“ Getting CyclePossible Items: 1 . 75Earned points: - 1 . seventy five 3. Earnings Testing MemoPossible Points: 1 . 75Earned points: 1 . 75 | Percent Earned100%100%100%100% | Comments: В See responses in the body of you conventional paper.
Total Feasible Point вЂ“ 7. 00 | 100% |
EarnedВ В В back button
Factors Possible | Points earned: six. 0