Audit Procedures on Retail Industry

Irvine Farhanan (120110120060)

Amanda Talitha Rahmadita (120110120152)
AfteAldo Pranata (120110120170)
A general audit procedure, which has been applied on retail industry, is
following the standard of SPAP (Standar Profesional Akuntan Publik) and
related Public Accounting Firms audit manual. From some examples of
audit manual, we found that the general audit procedure on retail industry
consists of some steps, there are:
1. Audit Planning
1.1
Understanding business process, sales, receivables & cash
received
1.2
Materiality
The amount of materiality usually set by related Public
Accounting Firm
2. Evaluation Control
After understanding the business process, sales, receivables, cash
received and materiality, auditor should obtain the understanding
the design and implementation of control over the business process.
If the design and implementation already been work effectively, we
can do the test of control
3. Substantive Test of Transactions
4. Analytical Procedures
5. Substantive Test of Detailed Balances

What are key controls? Key controls are elements of internal control that
have a pervasive affect upon the accomplishment of management's
control objectives. In fact, Matahari Department Store also has a key
controls regarding its internal environment.
I.

Ethical Code

Matahari Department Store has an ethical code, which respects a good

management principle. Transparency, accountability, responsibility,
independent, fair and equal rights have been expressed in their ethical
code. This ethical code explains the main value of company, also used by

the management team, board of directors, board of commissioner and

employees as the guidance.
This guidance is applied entirely on the company and every employee has
to sign an Ethical Code Guidance book, at least every 2 years as an
agreement that they will follow the rules.
Beside that, Ethical Code is reviewed and renewed to ensure that the main
point of it always be in line with companys goal, which are:
Integrating value of the company to ethical business practice for
employees in line with the companys vision and mission.
Clearly describe company value and decent behavior to be followed.
Provide basic guidelines to all management level in the company
regarding the interaction between top to bottom level, shareholders,
suppliers, government and stakeholders.
II.

Whistle Blowing System

Since 2011, Matahari Department Store has been applying Whistle Blowing
System into the entire internal system. Whistle Blowing System is an
application designed by Ministry of Finance for any parties inside the
company for who has information regarding inappropriate behavior, which
happens in the internal environment.
TransactionRelated Audit
Objectives
1. Recorded sales
are for
shipments
actually made
(Occurrence)

2. All existing
documents are
recorded
(Completeness)
3. Recorded sales
are correctly
billed
(Accuracy)
4. Sales
transactions are
correctly
summarized
(Posting)

Key Controls

Test of Controls

Substantive Test
of Transactions

- Sales are
supported by
authorized
shipping
documents and
approved
customer orders
- Comparing total
batch of quantities
to quantities billed
- Shipping
documents are
prenumbered and
accounted weekly

- Examine
customer order for
evidence of credit
approval
- Examine sales
invoice for
supporting bill of
lading & order

- Trace sales
journal entries to
supporting
documents
including all the
duplicates
document

- Examine file of
batch totals

- Trace selected
shipping
documents to the
sales journal

- Unit selling
prices are
obtained from the
price list master
file of approved
prices
- Automatically
posts transactions
by computer to
the related
account

- Examine the
approved price list
for accuracy and
proper
authorization

- Recompute
prices on sales
invoices

- Examine the
evidence

- Use audit
software to foot
and cross-foot the
sales journal

5. Correctly
classified
(Classified)

- Account
classifications are
internally verified

6. Sales are
recorded on the
correct dates
(Timing)

- Shipping
documents are
prenumbered and
accounted weekly

Design Test of Sales

- Examine
document
package for
internal
verification
- Account for
sequence of
shipping
documents

- Examine
duplicate sales
invoice
- Compare date of
recording journal
with the duplicate