Case Study: Performing Test of Controls Kitchen Ware Merchandise (KWM]) Co. has a year-end of 30 June 2022. KWM is a retailer of kitchen appliances such as washing machines, refrigerators, and microwaves. All sales are made via the company's website with dispatch and delivery of goods to the customers made using KWM's vehicles. Appliances are purchased from many different manufacturers.
The process of making a sale is as follows:
1. Potential customers visit KWM's website and select the kitchen appliance that they require. The website ordering system accesses the inventory specification file to obtain details of products KWM sells.
2. When the customer chooses an appliance, order information including price, item and quantity required are stored in the "orders pending' file.
3. Online authorization of credit card details is obtained from the customer's credit card company automatically by KWM's computer systems.
4. Following authorisation, the sale amount is transferred to the computerized-sales day book. At the end of each day the total from this ledger is transferred to the general ledger.
5. Reimbursement of the sale amount is obtained from each credit card company monthly, less the appropriate commission charged by the credit card company.
6. Following authorisation of the credit card, order details are transferred to a 'goods awaiting dispatch' file and allocated a unique order reference code. Order details are automatically transferred to the dispatch department's computer system.
7. In the dispatch department, goods are obtained from the physical inventory, placed on KWM vehicles and the computerized inventory system updated. Order information is downloaded on a handheld computer with a writable screen.
8. On delivery, the customer signs for the goods on the handheld computer. On return to KWM's warehouse, images of the customer signature are uploaded to the orders file which is then flagged as "order complete".
Required: Tabulate the audit control tests you should carry out on the sales and dispatch system and explain the reason for each test.