Vouch or Trace:
Learn by doing project requiring students to prepare work papers
example work paper submission
Work Paper 1
College Business Computer
Sales Collection cycle
Credit Sales transactions
performed by:
date:
Tad
1/28/10
nature of test
Test of Controls
objective
The objective of these procedure is to determine the effectiveness of controls over credit sales
transactions.
assertion(s)
Occurrence, completeness, accuracy and cutoff
procedure
M&M LLP selected a sample of 10 entries from the sales journal.
Each entry was vouched to the related invoice. The date, customer name and amount from the sales
journal were agreed to the invoice. The invoice was vouched to the related shipping document. The
customer information, items sold and quantities on the invoice were agreed to the shipping document. The
accounts receivable clerk’s initials were observed on the invoice indicating they agreed the customer
information, quantities and date shipped on the invoice with the shipping document and also the prices on
the invoice with the price list.
The shipping document and invoice were vouched to the related sales order. The customer information,
items sold and quantities on the shipping document were agreed to the sales order. The shipping clerk’s
initials were observed on the shipping document indicating they agreed the quantity on shipped with the
sales order. The customer information, items sold, quantities and prices on the invoice were agreed to the
sales order. The customer purchase order was observed on the sales order and the customer was agreed
with the official list of pre-approved customers.
For example, invoice 6521 was selected from the sales journal. The date, customer name and sales total
from the sales journal were agreed to the corresponding information on invoice 6521. Invoice
6521indicated the goods were made on shipping document 4971. From invoice 6521, the customer
information, items sold and quantities were agreed to the shipping document. The shipping document
indicated the order was placed on sales order 10151. The customer information, items sold and quantities
on shipping document 4971 were agreed to the corresponding information on sales order 10151. The
customer information, items sold, quantities and prices on invoice 6521 were agreed to sales order 10151.
Work Paper 3 shows the exceptions which were found in our sample.
conclusion
Based on our sample results of credit sales transactions, the clients controls over occurrence,
completeness, accuracy and cutoff do not support any reduction in our assessment of control risk. We will
assess control risk as high regarding these four assertions and change our audit approach to primarily
substantive.
Work Paper 2
College Business Computer
Sales Collection cycle
Sales
performed by:
date:
Tad
1/28/10
nature of test
Tests of Controls
objective
The objective of these procedure is to determine the effectiveness of controls over credit sales
transactions.
assertion(s)
Occurrence, completeness, accuracy and cutoff
Control Procedure
Test of operating effectiveness
Occurrence - Recorded sales are for shipments actually
made to existing customers
Select a sample of 10 entries from the sales journal
Vouch the entries from the sales journal to cross reference
Recorded sales are supported by invoices
invoices
Invoices are supported by shipping documents
Vouch the invoices to shipping documents
Shipping documents are supported by sales orders
Vouch shipping documents to sales orders
Sales orders include puchase orders from pre-approved Observe purchase orders on sales order and check fo
customers
customer on list of pre-appoved customers
Completeness - All sales that occurred are recorded
Sales orders, shipping documents and invoices are
prenumered
The number of sales orders is reconciled with the number of
shipping documents, invoices and number of entries in the
sales journal, every week
Observe that documents in the above sample ar
prenumbered
Select 10 weeks and review the reconciliation for thos
weeks
Accuracy - Recorded sales are for the quantity of goods
shipped and the correct price
For the 10 entries in the sample
The shipping clerk agrees the quantity on the shipping agree the quantity on the shipping document with quantit
document with the quantity on the sales order
on the sales order
observe the shipping clerk's initials
The accounts receivable clerk
agrees the name and address on the invoice with the sales agree the name and address on the invoice with the sale
order and shipping document
order and shipping document
observe the accounts receivable clerk's initials
agrees the quantity on the invoice with the sales order and agree the quantity on the invoice with the sales order an
shipping document
shipping document
observe the accounts receivable clerk's initials
2
Work Paper 3
College Business Computer
Sales Collection cycle
Sales
performed by:
date:
Tad
1/28/10
assertion(s)
Occurrence, completeness, accuracy and cutoff
ls
e da
r ve i
n it ia
obs e
ag re
ep
p r ic e r ic e o n I
NV w
lis t
it h
IN V
w it h
SD &
obs e
SO
r ve i
n it ia
ls
e q ty
it h S
O
r ve i
n it ia
ls
obs e
SD w
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
10165
√
√
√
√
√
√
√
√
√
√
√
√
√ √ √ √ √ √ √ √
NO n/a NO NO NO NO NO NO
√
NO
10188
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
#2
√
√ √ √
NO NO NO #1
√ √ √
√ √ √ #2
√ √ √
10191
√
√
√
√
√
√
√
√
√
√
10153
6526
4975
10155
6532
4981
6537
4985
6542
4990
10170
6545
NO
NO
6552
4998
10178
6560
5006
10186
6562
5008
6565
5011
ag re
ag re
ag re
√
√
√
4973
e na
ag re
e qty
num
be r
r o ve
pre -
-a pp
e rv e
r pre
O bs
to m e
√
√
√
C us
doc
S .O
h to
vo u c
h to
s h ip
ic e
vo u c
in v o
c h to
V ou
10161
√
√
√
6523
#1
#2
#3
t es i
n SD
w it h
obs e
I NV
r ve i
n it ia
ls
The objective of these procedure is to determine the effectiveness of controls over credit sales
transactions.
SO &
objective
me &
ad d r
es s
obs e
on d
r ve i
o cs
n it ia
ls
Test of Controls
d
nature of test
#3 NO #3
there were no shipping document or sales order to support this sale
the prices on the invoice were greater than the prices quoted on the sales order
the shipping document indicates this order was not shipped until 1/2/11
3