Question

You are the auditor of Revolution Pty Ltd (Revolution), and have made the following notes on Revolution’s cash receipts procedures:

• Cheques are received by mail and from sales representatives, who may obtain cheques directly from customers.
• All cheques are forwarded to the credit control clerk in the sales order department, who restrictively crosses the cheques. She then enters the details of the cheque into the system via a terminal and ages the receipt from the remittance details proved by the debtor, as attached to the cheque.
• After all cheques have been processed, the credit control clerk prints the daily cash receipts report. This report details all cheques input into the system since the production of the previous report. She agrees all cheques to this report, prepares a bank deposit slip and banks the cheques.
• At the end of the day, the accounts receivable master file is updated with cash receipts data.

From the above information, identify the key controls and determine an appropriate test of controls you would employ for each control.

Answer 1

S. No.	Key Controls	Appropriate Test Of Controls
1	Mail Accesibility ( Executie / L1 officer of Credit Control / L2 officer )	Password is not shared with everyone. Secondly mail is not accessed on Other User System.
2	Collection Of Cheque	Once Cheque Collected against Mail shall be recorded in Cheque Collection register maintained at Gate which will at the end of the day shall be reconciled by the Credit control Team. Here Cheque submitted and entered into register agianst serial number assigned to each mail inbox carries cheque information.
3	Entering Cheque details into System	Here Cashier/ Bank Controller will check that all cheque in Cheque Collection register is updatedin ledger or not. while reconciling it with the cheque collection register.
4	Master Data	Here Reporting of Master data either on weekly or Mid of the week to be checked. Secondly the reconciliation of credit of cheque during the week. With the Cashier details and Books.
5	Cheque Bounces	For Cheque Bounces mail has been forwarded or letter of query been raised to the customer.