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You have been assigned to perform tests of controls on the sales system at EDB...

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Accounting

You have been assigned to perform tests of controls on the sales system at EDB Pty Ltd as part of the 30 June 2018 audit. EDB is a wholesaler of bathroom supplies such as vanity units, toilets, taps and sinks. During testing, you noted the following errors: Invoice mo. 59328 issued on 18 March 2018 matched the customers order. However, the order was only partially filled because of a lack of stock in the warehouse, meaning items that were never delivered were included in the invoice. The error was discovered when the customer rang to complain about being overcharged.

Required:

(a) Describe application controls that would have prevented or detected the error.

(b) Describe further work you would perform in relation to each of the errors.

(c) Explain the implications of the errors for your substantive testing of accounts receivable.

(d) Briefly discuss how you would present these matters in your year-end management letter

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