You have been assigned to the audit of Orix Ltd, a large manufacturing company. The audit strategy indicates that a 'lower assessed level of control risk' strategy has been adopted. Key controls on which the team intends to rely for the revenue cycle are as follows:
1. All sales orders are taken over the phone. At the time the sale is taken the customer service officer checks that the customer is approved and that the sale will not result in the customer exceeding their credit limit.
2. All sales must be followed up by a written sales order (in triplicate) before goods are shipped from the warehouse.
3. On receipt of the sales order, one copy is matched to the computer records and the customer order is flagged as 'OK to proceed' within the system. A second copy is sent to the debtors clerk and a third copy is forwarded to the warehouse.
Required
For each of the controls identified above:
1. Indicate the purpose of the control (i.e. what is the control designed to prevent or detect?);
2. Indicate the account and assertion which this control will impact in the financial report; and
3. Describe one procedure which could be used to test the control.