What transaction-related and balance-related audit objectives would the auditors be most concerned about based on the process currently in place?

Parts for Wheels, Inc., has historically sold auto parts directly to consumers through its retail stores. Due to competitive pressure, Parts for Wheels installed an Internet-based sales system that allows customers to place orders through the company’s website. The company hired an outside website design consultant to create the sales system because the company’s IT personnel lack the necessary experience.
Customers use the link to the inventory parts listing on the website to view product
descriptions and prices. The inventory parts listing is updated weekly. To get the system online quickly, management decided not to link the order system to the sales and inven-tory accounting systems. Customers submit orders for products through the online system and provide credit card information for payment. Each day, accounting department
Required
In-class
Discussion
* Based on AICPA question paper, American Institute of Certified Public Accountants.
410Part 2 / THE AUDIT PROCESS clerks print submitted orders from the online system. After credit authorization is verified with the credit card agency, the accounting department enters the sale into the sales journal. The accounting department then sends a copy of the order to warehouse personnel, who process the shipment. The inventory system is updated based on bills of lading information forwarded to accounting after shipment.
Customers may return parts for full refund if returned within 30 days of submitting
the order online. The company agrees to refund shipping costs incurred by the customer for returned goods.
a. Describe deficiencies in Parts for Wheels’ online sales system that may lead to mate-
rial misstatements in the financial statements.
b. Identify changes in manual procedures that could be made to minimize risks, with-
out having to reprogram the current online system.
c. What transaction-related and balance-related audit objectives would the auditors be
most concerned about based on the process currently in place?
d. Explain how auditors might use generalized audit software to address the concerns
identified in part c.

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