Essay about Apollo Shoes - Internal Controls Solution

4098 Words Nov 22nd, 2009 17 Pages
ICC-1
Apollo Shoes, Inc.
Internal Control Questionnaire Sales Transaction Processing
December 31, 2007

Objectives and Questions Yes, No, N/A Comments
Environment:
1. Is the credit department independent of the sales department? Yes. Credit manager in Treasurer's office
2. Are sales of the following types controlled by the same procedures described below? Sales to employees, COD sales, disposals of property, cash sales and scrap sales. No available information, apparently not applicable
Existence Objective:
3. Is access to sales invoice blanks restricted? Yes. Kept in locked closet
4. Are prenumbered bills of lading or other shipping documents prepared or completed in the shipping department? Yes. Shipping department
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Dishonest shipping personnel can alone let accomplices receive large quantities and alter the invoice to charge them for small quantities. In this system, sales and accounts receivable would be understated, and inventory would be understated. The physical count of inventory will need to be observed carefully (extensive work) to detect material misstatement, if any.

ICC-1.3
Apollo Shoes
Accounting and Control Procedure Manual
Sales and Accounts Receivable Daily batches of sales invoices shall be analyzed by sales totals in the athletic shoes product lines. Sales credits are coded to three product line sales revenue accounts. Charges to customer accounts should be dated the date of shipment. When sales invoices are recorded, the numerical sequence shall be checked by an accounts receivable clerk, and missing invoices must be located and explained. The items shipped shall be compared to the items billed for proper quantity, price, and other sales order terms. The general ledger supervisor shall compare the copy 2 daily batch total with the copy 4 individual accounts posting total sent from the accounts receivable department. Discrepancies shall be investigated to help assure that the customer subsidiary accounts are posted for the same total amount posted to the control

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