Certified Internal Auditor (CIA) Practice Test

Which item of information is the most reliable for validating recorded sales?

1. A copy of the customer's purchase order

2. A memorandum from the shipping director

3. Accounts receivable records

4. The shipping document and independent bill of lading

The correct answer is: The shipping document and independent bill of lading

The shipping document and independent bill of lading is the most reliable item of information for validating recorded sales because it serves as a formal record that documents the transfer of goods from the seller to the buyer. These documents typically include detailed descriptions of the goods being shipped, the quantities, and the names of the parties involved in the transaction. Since they are created in the course of the shipping process, they provide a robust verification mechanism confirming that the goods associated with a sale have indeed left the seller's premises and are in transit to the customer. This level of documentation enhances reliability, as it involves multiple parties in the shipping process, and the independent bill of lading often acts as a third-party verification. Such a process is critical for accurate financial reporting and contributes to effective internal controls, thereby reducing the risk of errors or fraudulent activities related to sales reporting. The other options, while they can provide useful information, do not offer the same level of reliability. A customer's purchase order primarily serves as a request and does not confirm whether the sale actually occurred or if the goods were shipped. A memorandum from the shipping director is not sufficiently formal and lacks the independent verification that a shipping document offers. Accounts receivable records reflect sales that have been recorded but do not by themselves