Audit of Expenditure Cycle - Test of Controls and Substantive test of transaction I by CabreraFull description
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CREDIT TRANSACTION
Transaction Exposure
Credit TransactionFull description
Contents What is a Transaction Variant? ................................................................................................................. 2 Creating Transaction Variants .…Descripción completa
Contents What is a Transaction Variant? ................................................................................................................. 2 Creating Transaction Variants ...........Full description
reviewer
Journey - Separate WaysFull description
Transaction cycles
Transaction cycle consists of transactions that occur consisting of the cycle of steps that complete the exchange of assets or services between parties. Identifying Transaction Cycle is an important part of obtaining understanding of the client’s internal control because it helps the auditor gain adequate understanding of the flow of transactions and it better evaluate the impact of internal control on financial statements.
Revenue Cycle Audit Steps
A. Use the understanding of the client and its environment to consider inherent risks, including fraud risks, related to receivables and revenue. B. Obtain an understanding of internal control over receivables and revenue. C. Assess the risks of material misstatement and design further audit procedures. D. Perform further audit procedures —tests of controls. E. Perform further audit procedures —substantive procedures for receivables and revenue. Test of Controls and Substantive Tests
Transaction Objective
Occurrence
Test of Control
Substantive Tests
Computer -assisted
Review sequence of sales
auditing techniques
invoices
(CAATs)
Review journal for unusual
Examine Sales Invoice
transactions
packets for supporting
Vouch from the sales journal to
documentation
the supporting documents
Account for sequence of shipping documents Completeness
Observe and review evidence for document
Trace from the shipping documents to the sales journal
control
Accuracy
CAATs
Recalculate prices and extensions
Confirm agreement
on sales invoice
between supporting
Trace a few transactions from
documentation sources
inception to completion
Cutoff
Account for sequence of
Analyze Sales Invoices and
supporting documents.
Shipping Documents close to year
Confirm period reviews of
end to confirm appropriate
open files
recording Trace transactions from Sales
Classification
CAATs
Invoice to the Sales Journal, verifying appropriate classification
Analytical Procedures and Substantive Tests
Transaction Objective
Analytical Procedures
•
Compare gross
Substantive Tests
•
margins w/ prior
Existence •
Review subsidiary ledger for unusual amounts
years
•
Confirm receivables
Consider monthly
•
Alternative procedures
•
Trace from the A/R master to
sales over time Completeness
•
Compare A/R turnover w/prior
the aging schedule
years •
Review BOD minutes for A/R pledging or factoring
Rights & Obligations
N/A
•
Review material sales contracts for terms and conditions
•
Inquire of management
•
Compare bad debts to prior years
•
Compare
•
allowance account Valuation & Allocation
to prior years •
•
Inquire as to likelihood of collection for older accounts
