Southern New Hampshire University3-1 Audit Problem: Purchasi

Southern New Hampshire University3-1 Audit Problem: Purchasing Processes 01:46:56 GMT -05:00To: Audit TeamFrom: Robert MoehlerDate: 08/18/2024MemoSubject: Improving Franklin Industries' Sales Transaction Cutoff and Handling Audit ConcernsDear, Audit TeamI'm writing to discuss possible audit concerns with the purchasing procedure at Franklin Industries. After receiving a purchase order, the present process starts with creating a serially numbered sales order, which is subsequently sent to the accounting and shipping departments. A copy of the shipping invoice, which is serially numbered and submitted to accounting for record- keeping, is created by the shipping department upon the dispatch of goods. Free-on-board (FOB) shipping point terms apply to all shipments.The first possible audit issue has to do with commissions tied to sales. Sales clerks may falsify sales or report sales prematurely in order to enhance their fees because these commissions are usually based on sales numbers. Accounts receivable and sales may both be overstated as a result of this.The terms of FOB shipment point are the subject of the second worry. As per these conditions, the buyer acquires ownership of the items as soon as they are sent from the seller's location, hence sales and accounts receivable should be recorded at the time