Audit Design

2AUDIT PROGRAM DESIGN PART II

Audit Program Design Part II

During the audit process it is important to design tests of controls, substantive tests of transactions, and analytical procedures. This subject of this paper is to explore the sales andcollection, payroll and personnel, and acquisition and payments cycles for Apollo Shoes. It willexplain the various objectives related to the test of controls processes. It will also identify the keyinternal controls used by Apollo Shoes, Inc.

Sales and Collection Cycle

Performance of the analytical procedures in the sales and collection cycle at Apollo willconsist of scanning the sales journal to look for large and unusual transactions, compute thereceivables turnover ratio and compare with prior years, calculate the gross margin percentageand compare with prior years, and review sales by month over a period of 18 months for inconsistencies (Arens et al., 2006).

Test of Controls

The test of controls, substantive tests of transactions and analytical procedures in thesales and collection cycle at Apollo will focus on each transaction-related audit objective. Theseobjectives include existence, completeness, accuracy, classification, timing, and posting andsummarization.

Existence Objective

The test of controls the auditors will perform to verify that the existence objective is metwill be to examine customer orders for evidence of customer approval, examine sales invoicesfor supporting bill of lading and customer order, and determine if monthly statements are sent.

3AUDIT PROGRAM DESIGN PART IIThe substantive test of transactions will include accounting for the sequence of sales invoices,reviewing sales journals and master files for unusual transactions and amounts tracing sales journal entries to supporting documents (Arens et al., 2006).

Completeness, Accuracy, and Classification Objectives

The test of controls the auditors will perform for the completeness, accuracy, andclassification of transactions will...