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Essay / Neon Case Study - 1279
The impact of installing the new system affects major accounts such as cost of goods sold, revenue and inventory account. The auditor must carry out more detailed tests on the main current transaction accounts (turnover, inventories). The audit procedures that should be undertaken to verify the inventory account are observation of physical inventory and taking samples to verify the inventory cost. In order to carry out the observation, the auditor may carry out a combination of observation, investigation and physical examination (test accounts). In addition, sampling can be carried out by selecting purchases and attesting the cost price on the supplier's invoice or in analytical accounting records. The auditor can also check subsequent sales prices and compare them to cost. The major problem with turnover is overestimation; thus, as an auditor, it is possible to carry out certifications from entries in the sales journal to supporting sales documents (invoice or check). Another procedure is to verify that the last sales invoice before the balance date and the first sales invoice recorded after the balance date are recorded in the correct period. Additionally, the auditor may also perform fewer tests of control for routine transactions (sales and inventory), such as taking samples of sales transactions from the sales journal and reviewing evidence demonstrating that the comparison with the sales invoice sale made and these prices