XYZ Corporation is a large retailer that collects its order-to-cash data in a large ERP system that was recently
updated to comply with the AICPA’s audit data standards. XYZ Corporation currently collects all relevant data
in the ERP system and digitized any contracts, orders, or receipts that are completed on paper. The credit
department reviews customers who request credit. Sales orders are approved by managers before being sent
to the warehouse for preparation and shipment. Cash receipts are collected by a cashier and applied to a
customer’s outstanding balance by an accounts receivable clerk.
You have been assigned to the audit team that will perform the internal controls audit of XYZ Corporation.
Part 1: Identify appropriate questions and develop a hypothesis for each question
Your audit team has been tasked with identifying potential internal control weaknesses within the order-tocash processes.
1. Create a new word document and name the file ACCT 5345 Assignment 2_Your Name
2. Use what you know about internal controls over the order-to-cash process (or search the web if you need a
refresher) to identify three different questions that might indicate internal control weakness. For example, if
you suspect that a manager may be delaying approval of shipments sent to customers, your question might
be “Are any shipping managers approving shipments more than 2 days after they are received?” Type your
three questions into your document.
3. Next to each question generate a hypothetical answer to each question to help you identify what your
expected output would be. You may use some insight or intuition or search the Internet for ideas on how to
inform your hypothesis. For example: “Hypothesis: Only 1 or 2 shipping managers are approving shipments
more than 2 days after they are received.”
4. Finally, identify the data that you would need to answer each of your questions. For example, to determine
the timing of approval and who is involved, you might need the approver id, the order date, and the approval
date. Add your required data sources to each question in your document.