Acctg 527 – Clear, Concise, Correct, and Direct Writing in Audit
Communications
Summary of Procedures Narrative and Related Email
Objective:
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2.
Applying clear, concise, precise, and direct writing techniques to audit
documentation.
Ensuring that narrative is complete and well organized.
Scenario:
You are a first-year staff associate assigned to Outlook Company’s audit team.
Mary Magnus, your audit senior, asked you to interview Outlook’s controller, sales manager, and
treasurer to obtain an understanding of the company’s sales processing and credit approval
procedures. Your goal was to understand this part of Outlook’s accounting system clearly
enough to be able to write the internal control narrative for these procedures for the audit
workpapers. During your interviews, you took the following notes.
Controller’s Information
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Sales orders and invoices are prenumbered documents.
If credit is approved, the billing department gets the sales order and the customer
purchase order from the credit manager.
Billing department prepares a sales invoice after it receives the sales order
Sales invoice is a four-part form; two copies are kept with the sales order and the
customer PO and put into a temporary file, pending shipment.
A third copy of the sales invoice goes to the shipping department and is filed in a
temporary file until the goods are released from the warehouse.
Sales Manager’s Information
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Salesclerks receive POs from customers from mailroom.
Phone orders are also taken by sales clerks (keep phone log).
After getting customer’s order, salesclerks prepare a “sales order” that includes an
estimate of the total price of the order.
Sales order goes to credit manager for approval.
Customers’ POs (if received) are attached to the sales order by the salesclerks.
Treasurer’s Information
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Credit approval based on a predetermined credit limit for each customer and current
outstanding AR for that customer.
Credit manager signs the sales order if credit is approved.
Pre-writing Preparation: Study the information provided and develop an outline of the
flow of the control procedure to be presented in the memo. Document this flow with a pen
and pencil schematic (or flow chart, if you prefer), then (2) list items that are not resolved
or details that are not presented in the information provided above.
Acctg 527. Work-papers documentation. Internal Control Narrative and Related E-mail
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Writing Tasks: (Two documents are required. Work individually.)
Document 1
Using the outline schematic you have made in your preparation about the flow of the control
procedure, write the work-paper internal control narrative of procedures memo for Outlook’s
sales processing and credit approval procedures handling. This memo does not need a TO,
FROM, etc. section. Simply put a 3-line heading consisting of (1) the client’s name, (2)
“Internal Control Narrative,” and (3) “Sales Processing and Credit Approval.” Word limit
(excluding headings) -- 200.
If you work on this in a campus computer lab, e-mail the narrative to yourself as an attachment
or save it on a flash drive.
Document 2
Refer to the list of missing items you identified in the pre-writing session.
Assume the role of Mary Magnus, the audit senior. While reviewing the work-papers for the
Outlook audit, you examine the summary narrative the associate wrote, and you are concerned
about the missing information from the client. Write an e-mail to the associate in which you
identify these issues and ask the associate to follow up with the client. Use the following format
for this e-mail:
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Introductory paragraph consisting of no more than three relevant, direct sentences.
Bulleted list of questions to be asked of the client that will address the missing
information.
An appropriate closing sentence.
Word limit -- 120.
Acctg 527. Work-papers documentation. Internal Control Narrative and Related E-mail
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