Page 90 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
• Pricing is referenced from the company's price list or catalogue.
Referencing:
• Sales Advice number entered on the corresponding pre-numbered invoice.
• Invoice number recorded on the Sales Advice copy.
• Sales Advice copy filed alphabetically.
Distribution:
• First invoice copy sent to the customer.
• Subsequent copies sent to:
• Trade receivables ledger clerk.
• Inventory Section.
• Accounts Section.
Credit Notes:
• Billing Section raises credit notes from received documents.
• Prepared in sets of four.
• Distributed similarly to invoices.
Inventory:
• Invoice and credit note forms are stored in the Billing Section.
State of Internal Control as per Flow Chart.
Customer Order
Receipt Issues
Sales Advice: Salesmen send advice using the same form. No verification system ensures all advices are received,
potentially causing loss of business. (Order Receiving Section)
Order Concerns
Telephonic Orders: Sales advice are raised from phone orders without assessing party's standing/record, posing
business risks. (Order Receiving Section)
Credit Risks
Prior Sanction: No system for pre-sanctioning credit to parties, which may lead to dispatches to high credit risk
parties. (Dispatch Section)
Dispatch & Billing
Sales Advices Check: Absence of validation that second copies of sales advices from Dispatch reach Billing.
Unbilled dispatches might occur. (Dispatch & Billing Section)
Invoice Accuracy
Pricing and Calculation: No checks regarding invoice pricing, extension, or addition, which may lead to
revenue loss from errors. (Billing Section)
Documentation
Credit Notes: Uncertainty about the adequacy of supporting documents for issuing credit notes. A need for
more caution. (Billing Section)
For the purpose of drawing a flow chart to incorporate the above narration it is useful to know -
Origin: Identify the starting point of the transaction flow.
Documentation: Understand the types of internal and external documents involved in the transaction,
including the flow of these documents, the number of copies required, the distribution flow, and any specific
details associated with each document.
Record-keeping: Determine any books or records maintained for the transaction, along with the specific details
recorded in these books and the sources from which these details are obtained.
Alternatives: Consider any alternative possibilities that may exist.

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