[AMERICANDREAM]

Which of the following procedures most likely would not be an internal control procedure designed to reduce the risk of errors in the billing process?

Comparing control totals for shipping documents with corresponding totals for sales invoices. CORRECT
Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger.

Can someone explain why the first answer choice is correct? I don’t really understand the difference between the two…

[hiphopbaby]

Both are good internal control. The question can be tricky, because it is asking internal control for billing process. First one checks the total for shipping documents to totals for sale invoice (Can check the accuracy and completeness for the billing process. ) It helps the company to have the correct number in invoice – billing process. Second one, totals for sale invoice (already done billing process) to A/R subsidiary ledger. This is checking A/R balance which is not billing process, making sure all invoiced number is reflected in the general ledger.

[Skynet]

Comparing vs Reconciling

Comparing – You are walking with your wife and she catches you checking out other young and good looking women comparing how hot they are between them and your wife.

Reconciling – Because of your wandering eye and staring at other women, your wife is really pissed. Now you are constantly apologizing and trying to reconcile with her and hoping she lets you back into the house.

[Missy]

Even reconciling control totals for sales invoices to the accounts receivable subledger doesn't reduce the risk of billing errors, if one is wrong the other is almost certain to be wrong too. However if there is a billing error it is most likely billing something that hasn't shipped yet or neglecting to bill something that has shipped so comparing those is more likely to uncover an error.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Author]

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