Discuss with the sales manager whether any sales allowances have been granted after the balance sheet date that may apply to the current period.

The following are audit procedures in the sales and collection cycle:
1. Foot the aged trial balance using audit software and compare the total with the general ledger.
2. Match sales invoices with subsequent cash receipts using audit software.
3. Examine a sample of customer orders and see whether each has a credit
authorization.
4. Compare the date on a sample of shipping documents a few days before and after the balance sheet date with related sales journal transactions.
5. Compute the ratio of allowance for uncollectible accounts divided by accounts re-
ceivable and compare with the ratio for previous years.
6. Discuss with the sales manager whether any sales allowances have been granted after the balance sheet date that may apply to the current period.
7. Observe whether the controller makes an independent comparison of the total in the general ledger with the trial balance of accounts receivable.
8. Compare the date on a sample of shipping documents throughout the year with re-
lated sales invoices and the accounts receivable master file.
a. For each procedure, identify the applicable type of audit evidence.
Required
Required
566Part 3 / APPLICATION OF THE AUDIT PROCESS TO THE SALES AND COLLECTION CYCLE
b. For each procedure, identify which of the following it is:
(1) Substantive analytical procedure
(2) Test of control
(3) Substantive test of transactions
(4) Test of details of balances
c. For those procedures you identified as a test of control or substantive test of transactions, what transaction-related audit objective or objectives are being satisfied?
d. For those procedures you identified as a test of details of balances, what balance-related audit objective or objectives are being satisfied?

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