Reference no: EM132826564

Edition Lt is an online Department Store that brand name clothing and shoes at a discount rate of 65% below manufacturing suggested retail price. The company purchases the items directly from various factories outlet and then resells this using the Internet as the only selling media. The company has over 150 different types of clothing and shoes available in inventory, each identified via a unique product code.

Customers place their orders directly on the Internet site. The ordering/sales software automatically verifies the order details, customer address and credit card information prior to orders being verified and goods being despatched. The integrity of the ordering system is checked regularly by IMACC, an independent Internet service company.

You are the audit manager working for the external auditors of Edition Ltd, and you have just started planning the audit of the sales system of the company. You have decided to use test data to check the input of details into the sales system. This will involve entering dummy orders into the Edition Ltd system from an online terminal.

Required

(a) In an effort verify the accuracy of the information presented in the income statement as revenue earned for the period of the audit list the test data you will use to confirm the completeness and accuracy of input into the sales system, clearly explaining the reason for each item of data.

(b) In respect of the data files in the sales and inventory system a substantive testing of the data files in the sales and inventory systems of Edition Ltd You are also considering using audit software

(i) The use of Audit Software should make the work of auditors less time consuming explain some of the difficulties of using the audit software.

(ii) In order for the auditors to rely on the work on the information systems used by the organisation there should be adequacy of controls? Briefly discuss the controls which are to be reviewed.