Auditing - 9.24 Essay

Submitted By bb90
Words: 434
Pages: 2

9.24 (Hard)
There are two types of revenue from services accounts: revenue from continuing services, and revenue from emergency services transactions.
To plan audit tests, the auditor should understand the nature of transactions and their related internal control, and the documents and files that support the recording of these revenue streams. Thus, detailed program planning should include consideration of these factors.

1 Pre-numbered annual contracts are prepared and a signed copy kept on file.
(a) Original filed in numerical order by contract anniversary date
(b) Copy to customer
Test of controls: Review file of pre-numbered annual contracts, ensuring signed copy kept and sequence accounted for.

2 Contract renewals are identified and pre-numbered invoices prepared.
(a) Original to customer 30 days before due date
(b) Duplicate filed chronologically by due date
(c) Triplicate filed alphabetically by customer
Test of controls: Observe contract renewals, and inspect sample of copies kept on record.

3 Veterinarians must prepare weekly time reports. These are expected, although detail is not provided that all those expected are accounted for. Provision of services is kept separate from the billing.
(a) Time charges for emergency visits shown separately
(b) Billing at set rate of 300 per cent of hourly rate
Test of controls: Inquire about controls on weekly reports; especially, see if all expected are accounted for.

4 Notices of cancellation and reinstatement notified to all service representatives and written acknowledgement of receipt of notification required. This must all be approved by the president.
(a) Original to customer
(b) Copy attached to contract
(c) Notice sent to service representative
Test of controls: Review file for evidence that written acknowledgement of receipt of notification is received and approved by president.

5 A possible control weakness is that the list of