NAMA : ELSA ROSALIA

NIM : 023141199
H/J/R : SABTU/ 07;30-10;00
DOSEN : ATI KUSHARIANI.,SE,BBAHon.,MIB
MATAKULIAH : PEMERIKSAAN AKUNTANSI II
CHAPTER : 14

14-25

1. a. Test of control
b. Existing sales transactions are recorded. (Completeness)
c. Documentation
2. a. Test of control
b. Recorded sales are for shipments actually made to existing
customers. (Occurrence)
c. Documentation
3. a. Substantive test of transactions
b. Recorded sales are for the amount of goods shipped. (Accuracy)
c. Documentation
4. a. Substantive test of transactions
b. Sales transactions are properly included in the accounts
receivable master file and are correctly summarized. (Posting
and summarization)
c. Reperformance
5. a. Test of control
b. Recorded sales returns are for returns from existing customers.
(Occurrence)
c. Documentation
  CASE 14-33
B DAN C.
TRANSACTIONRELATED INTERNAL CONTROLS
AUDIT OBJECTIVE
1. Recorded sales Bill of lading and sales order
occurred. form are attached to invoice.
Sales are initiated by sales
order form from customer.
Credit department
investigates customer credit
and approves sales before
shipment of merchandise is
authorized.
2. Existing sales Bill of lading and invoices
transactions are are prenumbered
recorded. (numerical sequence is not
accounted for) and must be
prepared before
merchandise is shipped.
3. Recorded sales are Control totals are prepared
at the correct and checked by computer.
amounts. (No verification of the sales
price is performed.)
4. Sales transactions Sales transactions are
are properly simultaneously recorded in
included in the sales, accounts receivable,
TEST OF CONTROL
Examine invoice
package for presence
of bill of lading and
sales order form.
Examine sales order
form for indication of
credit approval.
Review client's credit
approval system for
effectiveness.
Account for numerical
sequences of bills of
lading and sales
invoices and
determine that all
have been recorded.
Examine computer
edit reports for
indication of errors
and disposition
thereof.
Trace sales
transactions to sales
journal.
accounts receivable cost of sales, and relievedfrom the
master file and are perpetualinventory.
correctly
summarized.
5. Recorded sales are None. Not applicable.
properly classified.
6. Sales are recorded on the None. Not applicable.
correct dates.

D)

TRANSACTIONRELATED SUBSTANTIVE TEST OF TRANSACTIONS

AUDIT OBJECTIVE AUDIT PROCEDURES
1. Recorded salesoccurred. Select a sample of sales from sales journal and
examine customer's purchase order, sales order
form, and bill of lading to determine that the goods were
ordered and shipped.
2. Existing salestransactions are Perform analytical tests, including comparisons of
recorded. operating statistics to prior years and month to month at
year-end.
3. Recorded salestransactions are Compare sales prices to price lists. Examine
stated at the correctamounts. customer correspondence indicating pricing
disputes. Test clerical accuracy of a sample of
sales invoices.
4. Sales transactions are properly Foot the sales journal and trace the balance to the general
included in the accounts receivable ledger.
master file and are correctly
summarized.

5. Recorded sales are Examine sales documents to determine that sales

properly classified.
6. Sales are recorded
on the correct dates.
transactions are properly classified.
Compare dates on bills of lading to the sales
journal to determine that sales are recorded on a timely
basis. Compare sales month to month and investigate any
significant fluctuations, especially near year-end.

E) An audit program for conducting the audit of sales is as follows:

1. Obtain the sales journal for the year and perform the following
procedures:
(a) Foot the journal for one month and reconcile to the
general ledger balance.
(b) From the journal, select a sample of invoices and
perform the following:

14-33 (continued)
(1) See that the customer's purchase order, sales order form, and bill of lading are available.
Compare quantity, sales price, customer name, and date of shipment to sales journal. Obtain
explanation of any differences.
(2) Examine sales order form for indication of credit approved.
(3) Compare sales price to price list.
(4) Test clerical accuracy of sales invoices.
(5) Determine propriety of classification of sales transactions.
2. Select a sample of bill of lading numbers. Locate the corresponding bills of lading and
trace them to the sales journal to determine that the shipments were recorded. Compare the
date per the bill of lading to the date per the sales journal to determine the promptness of
recording.
3. Examine customer correspondence during the year for disputes
on pricing of invoices.
4. Prepare a schedule of sales, cost of sales, and gross margin percentage, showing
comparison between recent years and month to month. Obtain explanation of any significant
fluctuations.
NAMA : ELSA ROSALIA
NIM : 023141199
H/J/R : SABTU/ 07;30-10;00
DOSEN : ATI KUSHARIANI.,SE,BBAHon.,MIB
MATAKULIAH : PEMERIKSAAN AKUNTANSI II
CHAPTER : 15

15-25
A)
SAMPLING UNIT NUMBERING SYSTEM EXCEL SELECTION
FOR THE POPULATION FORMULA
1. Sales invoice All invoices numbered 0001 to =RANDBETWEEN(1,8274)
8274
2. Bill of lading All bills of lading =RANDBETWEEN(18221,29
numbered 18221 through 29427 427)
(if arandom number table is
used, the left-most digit “2” can
be
dropped)
3. Customer A pair of random numbers, =RANDBETWEEN(1,20) and
where the first random number is =RANDBETWEEN(1,50)
the page number (1-20), and the
second random number is the
line number on the page (1-50)
4. Line numbers on the sales A pair of random numbers, =RANDBETWEEN(1,215)
journal that have a sales where the first random number is and
invoice recorded on them the page number =RANDBETWEEN(1,100)
(1-215), and the second random
number is the invoice as counted
down
from the top of the page (1-100)
15-25 (continued)
An example random sampling plan prepared in Excel (P1525.xls) is available on the Companion
Website. The command for selecting the random number can be entered directly onto the
spreadsheet, or can be selected from the function menu (math & trig) functions. It may be
necessary to add the analysis tool pack to access the RANDBETWEEN function. Once the
formula is entered, it can be copied down to select additional random numbers. When a pair of
random numbers is required, the formula for the first random number can be entered in the first
column, and the formula for the second random number can be entered
in the second column.

B). First five numbers using systematic selection:

SAMPLING UNIT INTERVAL RANDOM FIRST 5 SAMPLE
STARTING ITEMS
POINT
1. Sales invoice 110 (8274/75) 39 39
149
259
369
479
2. Bill of lading 149 [(29427-18221) = 18259 18259
11206/75] 18408
18557
18706
18855
3. Customer 13 (979 lines/75) Page 1, line #11 Page Line
1 11
1 24
1 37
1 50
2 13
Using systematic selection, the definition of the sampling unit for determining the selection
interval for population 3 is the total number of lines in the population. The length of the interval
is rounded down to ensure that all line numbers selected are within the defined population.

CASE 15-34
a. Audit sampling could be conveniently used for procedures 3 and 4 since each is to
beperformed on a sample of the population.
b. The most appropriate sampling unit for conducting most of the audit sampling tests is the
shipping document because most of the tests are related to procedure 4. Following the
instructions of the audit program, however, the auditor would use sales journal entries as the
sampling unit for step 3 and shipping document numbers for step 4. Using shipping document
numbers, rather than the documents themselves, allows the auditor to test the numerical control
over shipping documents, as well as to test for unrecorded sales. The
selection of numbers will lead to a sample of actual shipping documents upon which tests will be
performed.
c. Note: The sampling data sheet that follows assumes an attributes sampling approach. The
only difference between the sampling data sheet for attributes sampling and for nonstatistical
sampling is the actual determination of sample size. For nonstatistical sampling, students’
answers will vary, but will most likely be comparable to the sample sizes determined under
attributes sampling.
NAMA : ELSA ROSALIA
NIM : 023141199
H/J/R : SABTU/ 07;30-10;00
DOSEN : ATI KUSHARIANI.,SE,BBAHon.,MIB
MATAKULIAH : PEMERIKSAAN AKUNTANSI II
CHAPTER : 16

16-23
1. Detail tie-in
2. Detail tie-in
3. a. Existence
b. Accuracy
c. Realizable value (if cash receipts relate to older accounts)
4. a. Existence
b. Accuracy
5. a. Existence
b. Accuracy
c. Realizable value (if cash receipts relate to older accounts)
6. Cutoff
7. Rights
8. Classification

Case 16-34

a. There are four major factors affecting acceptable audit risk for the audit of Smalltown
Regional Hospital.
1. There are several large loans to two local banks, both which
have said they are reluctant to extend more credit.
2. A modern hospital is being built in a nearby city, which affects
the competitive environment, and therefore the likelihood of
financial failure.
 3. The hospital has been incurring significant deficits in the past.
4. County taxes may not be able to make up the deficits, as they
have in the past. Considering the combined effect of these factors, the auditor shouldset a
low acceptable audit risk.

b. The following are major inherent risks:

1. In the audit of accounts receivable and property, plant and
equipment, the amounts are highly material.
2. Misstatements are common in billings, cash receipts, accounts
receivable balances, and bad debts.
3. Due to the high unemployment rate, there is a significant risk
of increased bad debts.

c). The major difficulty the auditor faces is the ineffective controls over sales and the
unreliability of confirmations because of the nature of the customers. The auditor should
therefore plan to emphasize substantive tests of transactions for sales and alternative procedures,
especially subsequent cash receipts. The controls over cash receipts are such that it is practical to
reduce assessed control risk after a proper understanding is obtained of internal control and tests
of controls are performed. A likely approach is the following:

1. Test internal controls over cash receipts using tests of controls

to make sure that the controls are effective to prevent fraud.

2. Do substantive tests of transactions for revenues, with emphasis

on tests for unrecorded revenues, billing misstatements, and
recording misstatements. The sample for sales should be traced
to subsequent cash receipts to test whether each receipt has been correctly recorded. One
important test is to select a sample of patient charts and trace transactions through to the
revenue journal. The patient chart is a reliable indicator of services provided to patients.

16-34 (continued)
 3. The accounts receivable aged trial balance should be tested
for detail tie-in. Minimal confirmations should be sent, with
emphasis on large or unusual balances. The emphasis should
be on subsequent cash receipts.
4. A careful evaluation of all older, outstanding accounts is
essential due to the likelihood of bad debts. The high
unemployment rate in the community increases the likelihood
of a material misstatement of the allowance for uncollectible
accounts.

d). The following emphasis is appropriate for each type of test:

TYPE OF TEST EMPHASIS REASON
1. Test of controls None, except control Controls are deficient in all
of cash receipts. areas except cash receipts.
2. Substantive test of Extensive Tests of details of balances
transactions evidence (confirmation) is not
reliable, therefore substantive
tests of transactions are the
most important evidence.
Substantive tests of
transactions are even more
important because of potential
for misstatement for the
completeness objective. Tests
of details of balances are
unlikely to uncover any
existing misstatements for this
objective.
3. Analytical procedure Extensive An indication of
misstatements may result from
 these tests.
4. Tests of details of balances Reasonably extensive, except Confirmations are not
confirmations which emphasized because of the
should be minimal. lack of reliability in the
situation. Tests of details of
balances are used most
extensively for bad debts
and the allowance for
uncollectible accounts.