Question

During the review of financial records, internal auditors request the auditee to provide a sales report from November 2017 to January 2018 with the records of all the sales and credit memos issued during these period. Which of the follows is most likely the auditor’s intention here?

Select one:

a. To investigate potential overstatement of credits in 2017

b. To investigate potential overstatement of sales in 2017

c. To investigate potential understatement of sales in 2018

d. To investigate potential understatement of expenses in 2018

Answer 1

To investigate the potential overstatement of sales the auditor request the sales and credit memo issued during the period. Therefore the sales and the credit memos will be act as audit evidence for the verification of actual sales. Any over statement of sales verified from the credit memos issue during the period. A credit memo is a commercial document issued by a seller to a buyer. Credit notes act as a source document for the sales return journal. The difference between the sales and credits issue is a actual sales of the year