QUESTION: You are part of the audit team that is presently auditing the general purpose financial statements of Tensor Limited and have made the following notes on your working papers in relation to the cash receipts procedures:
(A) Cheques are received by the company in two ways - directly by mail or through a sales representative who receives it from a customer.
(B) Sharon Peters, the credit control clerk in the sales order department receives all cheques and restrictively crosses the cheques using the stamp "account payee only".
(C) The customer usually attaches the remittance advice details to the cheque.
(D) Sharon Peters uses the terminal to enter the details of the cheque into the system and ages the receipt by looking at the details provided by the customer in the remittance advice.
(E) After processing (inputting) all the cheques Sharon Peters prints the daily cash receipts report.
(F) The cash receipts report details all the cheques input into the system since the last report. Sharon agrees all cheques to this report.
(G) Sharon then prepares a bank deposit slip and banks the cheques in the Commonwealth Bank operations account owned by Tensor Limited.
(H) The accounts receivable master file is updated, daily with the cash receipts data.
REQUIRED:
Identify 3 key controls relating to the cash receipts cycle and determine an appropriate test of controls you would carry out for each control.