Week 3 team assignment outline - Essay Example

ICQ, or an internal control questionnaire, has been filled out by the auditors, based on information provided by the internal audit department of Apollo Shoes. That information was pertaining to Revenue Cycle and processing of sales transactions. However, the information was not capable of assessment as a part of Revenue Cycle of Apollos shoes, and the applicability of internal control procedures designed for sales transactions processing, on those transactions, could not be identified. It was necessary for that all Sales transactions would be identified accurately and processed according to the established procedure in order to be capable of going through the process of risk assessment of internal controls.

There was another risk of understated revenue and fraud. It is very important that number of sequences should be present on all invoices, shipping documents and processing checks. There was missing information as to the number sequence used for invoices, processing checks and shipping documents in order to ensure completeness. In case of missing invoices, shipping documents and processing checks, it will be difficult to identify and may lead to financial loss, inappropriate quality of relation with suppliers/customers and even Fraud.

The above two issues can materially misstate the amount of revenue and receivables, and the quality of work will be affected. These two issues can possibly be an indication of Fraud, and auditors may need to be withdrawn from the audit altogether. It is very necessary for the management to pay close attention to our audit finding and investigate the reasons of any deviations from established control procedures. In case of absence of any related control procedure, management should consult auditors on establishing new internal controls or finding any substitute methods to mitigate the identified