Deal with the problems faced by alabama industries

Reference no: EM13174407

PREVENT CONTROLS Alabama Industries manufactures and wholesales small tools. It sells the tools to a large group of regular customers and makes most sales by telephone to this group. Additionally, it receives orders online by its sales team who sign up new customers within the sales area. In the past Alabama Industries has had trouble with customers who do not pay their accounts on time. Despite instructing the sales team not to make sales to customers before their limits have been set and to existing customers beyond their credit limit. Also, the economic recession has started to impact its customers, and Alabama's management is concerned about the possibility of increasing bad debts.

Required :

(a) What sort of prevent control could be used to deal with the problems faced by Alabama industries? Explain how the control would work ?

(b) Assume the prevent control is implemented and during this year there have been no sales to customers that have taken any customer beyond its credit limit. What are the two possible explanations for this that the auditor must consider?

(c) If an auditor finds 2 sales transactions during the year that are in excess of a customer's credit limit at the time of the sale, what conclusion would the auditor draw from this evidence? What other evidence could the auditor consider before concluding that prevent control has failed?

Reference no: EM13174407

Questions Cloud

How many moles of naoh should be added to a solution : How many moles of NaOH should be added to a solution containing 0.440 moles of formic acid, HCOOH, to prepare a formic acid/formate

Relevant category of fringe benefit : Kerry is an employee of the university. She is provided with 10 giftvouchers worth $50 each for use at the local supermarket as a Christmasgift. Advise Kerry and the University of the Tax Consequences of thistransaction.

Analyze monopoly after the tax : A profit-maximizing monopoly faces an inverse demand function described by the equation p(y) = 50 - y and its total costs are c(y) = 10y, where prices and costs are measured in dollars.

How to maximize the profit : If the demand schedule for Bong's book is Q = 2000-100p, the cost of having the book typeset is $9000, and the marginal cost of printing an extra book is $4, then how he would maximize his profits.

Deal with the problems faced by alabama industries : What sort of prevent control could be used to deal with the problems faced by Alabama industries? Explain how the control would work ?

Expansion in money supply increase real output nd employment : Historically, shifts towards a more expansionary monetary policy have often been associated with increases in real output. Is this surprising? why or why not?

State common laboratory reagents : We wish to prepare a buffer of pH 10 using common laboratory reagents. How many mL of 6M HCl would we have to add to a solution prepared by adding 100 mL of 15M NH3 to 200 mL of water?

Perform whatever separations and tests you think necessary : Perform whatever separations and tests you think necessary to determine which ions are in fact present

Prepare a response to the graduates concerns : Prepare a response to the graduate's concerns. You should include a description of what an internal control is, the relationship between internal control components, organisational objectives and the different divisions of the organisation, and a ..

User Account

All Pages