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    Auditing Notes For Pre Mid Exam A.Y. 15/16 Audit Revenue Cycle

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    Sherlock Holmes
    The document provides notes for an exam on auditing various cycles, including the revenue, expenditure, human resources/payroll, production, and property, plant and equipment cycles. It lists the objectives, key transactions, affected accounts, functions, documents and records for each cycle. It also provides sample audit procedures for substantive testing of assertions related to accounts receivable, accounts payable, and the production cycle.

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    Auditing Notes For Pre Mid Exam A.Y. 15/16 Audit Revenue Cycle

    Uploaded by

    Sherlock Holmes
    51 views6 pages
    The document provides notes for an exam on auditing various cycles, including the revenue, expenditure, human resources/payroll, production, and property, plant and equipment cycles. It lists the objectives, key transactions, affected accounts, functions, documents and records for each cycle. It also provides sample audit procedures for substantive testing of assertions related to accounts receivable, accounts payable, and the production cycle.

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    General Notes 2

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    The document provides notes for an exam on auditing various cycles, including the revenue, expenditure, human resources/payroll, production, and property, plant and equipment cycles. It lists the objectives, key transactions, affected accounts, functions, documents and records for each cycle. It also provides sample audit procedures for substantive testing of assertions related to accounts receivable, accounts payable, and the production cycle.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    51 views6 pages

    Auditing Notes For Pre Mid Exam A.Y. 15/16 Audit Revenue Cycle

    Uploaded by

    Sherlock Holmes
    The document provides notes for an exam on auditing various cycles, including the revenue, expenditure, human resources/payroll, production, and property, plant and equipment cycles. It lists the objectives, key transactions, affected accounts, functions, documents and records for each cycle. It also provides sample audit procedures for substantive testing of assertions related to accounts receivable, accounts payable, and the production cycle.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 6

    AUDITING

    NOTES FOR PRE MID EXAM A.Y. 15/16

    AUDIT REVENUE CYCLE

    1. Elaborate the objective of audit the revenue cycle.

    The objective of audit the revenue cycle is to test the fairness of management
    assertions related to the sales transaction of products or services that become
    the main business of the entity, either cash sales or credit sales.

    2. Elaborate the PCAOB framework that can be used as guidance in auditing the
    revenue cycle as well as the others transactions cycle.

    As a guidance in auditing the transaction cycle, auditor can uses the PCAOB
    framework as follows:
    1. Existence or occurrence
    2. Completeness
    3. Right and obligation
    4. Valuation or allocation
    5. Presentation and disclosures

    3. What are the transactions related to revenue cycle

    Transactions related to revenue cycle involves:


    1. Cash sales
    2. Credit sales
    3. Cash settlement or cash receives for receivables
    4. Allowance for doubtful accounts
    5. Write-off of account receivables
    6. Sales discounts
    7. Sales return and allowance
    8. Conversion of account receivables to notes receivables

    4. What are the accounts affected by the revenue cycle transactions.

    The accounts affected by the revenue cycle invoves:


    1. Cash
    2. Receivable
    3. Sales
    4. Bad debt expense
    5. Allowance for bad debt expense
    6. Sales discount
    7. Sales return and allowance
    8. Notes receivable

    5. What are the organization functions related to the revenue cycle?

    The organization functions involves:


    1. Marketing
    2. Sales
    3. Credit authorization
    4. Shipping of goods or services
    5. Invoicing
    6. Recording sales
    7. Cash receive

    6. What are the common documents and records related to the revenue cycle?

    The documents and records involves:


    1. Customer order
    2. Sales order
    3. Shipping document
    4. Sales invoice
    5. Authorized price list
    6. Sales transactions file
    7. Sales journal
    8. Customer master file
    9. Account receivable master file
    10. Customer monthly statement

    7. What are the important documents and records used in processing cash
    receipts?

    The documents and records used in processing cash receipts include the
    following:
    1. Remittance advice, this is a document mailed to the customer with the
    sales invoices to be returned with the payment showing the customer’s
    name and account number, invoice number, and amount owed.
    2. Prelist, is a listing of cash receipts.
    3. Cash count sheets, is a listing of cash and checks in a cash register.
    4. Daily cash summary
    5. Validated deposit slip
    6. Cash receipts transaction file
    7. Cash receipts journal
    Notes: Entity may simplify the documents and records.

    8. What does sales adjustment mean?

    Sales adjustment is any adjustment to sales transaction, such as adjustment for


    sales return and allowance, sales discount, and account receivable write-off.

    9. What are the common documents and records used in processing sales
    adjustments?

    The common documents and records used in processing sales adjustments


    include the following.
    1. Sales return authorization
    2. Authorization for accounts receivable write-off
    3. Receiving report
    4. Credit memo
    5. Journal entry

    10. List the initial procedures for the substantive tests of account receivable
    assertions.

    The initial procedures for the substantive tests of account receivable assertions
    involves:
    1. Obtain an understanding of the business and industry, to determine:
    a. The significant of revenues and accounts receivable to the entity.
    b. Key economic drivers that influence the entity’s sales, margins, and
    collections.
    c. Standard trade terms in the industry, including seasonal dating,
    collection period, etc.
    d. The extent of concentration of activity with customers.
    2. Perform initial procedures accounts receivable balance and records that
    will be subjected to further testing, involves:
    a. Trace beginning balance for accounts receivable to prior year’s
    working papers.
    b. Review activity in general ledger account for accounts receivable and
    investigate entries that appear unusual in amount or source.
    c. Obtain account receivable trial balance and determine that it
    accurately represents the underlying accounting records by:
    c.1. Footing the trial balance and determining agreement with (a) the
    total of the subsidiary ledger or accounts receivable master file,
    and (2) the general ledger balance.
    c.2. Testing agreement of customer and balances listed on the trial
    balance with those included in the subsidiary ledger or master
    file.

    11. List the tests detail of transactions for accounts receivable assertions.

    The tests detail of transactions for accounts receivable assertions involve:


    1. Vouching the sample of recorded revenue cycle transactions to supporting
    documentation.
    2. Tracing sample of revenue cycle transactions documents, such as sample
    of sale invoices, to sales journal. Also trace sample of cash receipts and
    sales returns to their recording in the accounting records.
    3. Perform cut of test for sales and sales returns, such as selecting sample of
    recorded sales transactions several days before and after year-end to
    determine the proper period of the recording transactions.
    4. Perform cash receipts cut-off test, to evaluate the proper period of the
    recording cash receipts.

    12. What are you going to do in conducting tests detail of accounts receivable
    balances?

    Test detail of accounts receivable balances is conducted by sending


    confirmation letter to the selected accounts receivable.
    AUDIT EXPENDITURE CYCLE

    13. Elaborate the objective of audit the expenditure cycle.

    14. Instead of using the PCAOB framework as guidance in auditing the


    expenditures cycle as well as the others transactions cycle, auditor can use the
    AICPA framework. Elaborate the AICPA framework for the audit of
    management assertions.

    15. What are the transactions related to the expenditure cycle

    Transactions related to expenditure cycle involves:

    16. What are the accounts affected by the expenditure cycle transactions.

    The accounts affected by the expenditure cycle invoves:

    17. What are the organization functions related to the expenditure cycle?

    The organization functions involves:

    18. What are the common documents and records related to the expenditure cycle?

    The documents and records involves:

    19. What are the important documents and records used in processing cash
    disbursements?

    The documents and records used in processing cash disbursements include the
    following:

    20. What does purchase adjustment mean?

    21. What are the common documents and records used in processing the purchase
    adjustments?

    The common documents and records used in processing the purchase


    adjustments include the following.

    22. List the initial procedures for the substantive tests of account payable
    assertions.

    The initial procedures for the substantive tests of account payable assertions
    involves:

    23. List the tests detail of transactions for accounts payable assertions.

    The tests detail of transactions for accounts payable assertions involve:


    AUDIT HUMAN RESOURCE/PAYROLL CYCLE

    24. Elaborate the objective of audit the human resource/payroll cycle.

    25. What are the transactions related to the human resource/payroll cycle

    Transactions related to the human resource/payroll cycle involves:

    26. What are the accounts affected by the human resource/payroll cycle
    transactions.

    The accounts affected by the human resource/payroll cycle invoves:

    27. What are the organization functions related to the human resource/payroll
    cycle?

    The organization functions involves:

    28. What are the common documents and records related to the human
    resource/payroll cycle?

    The documents and records involves:

    AUDIT PRODUCTION CYCLE

    29. Elaborate the objective of audit the production cycle.

    30. What are the transactions related to the production cycle

    Transactions related to the production cycle involves:

    31. What are the accounts affected by the production cycle transactions.

    The accounts affected by the production cycle invoves:

    32. What are the organization functions related to the production cycle?

    The organization functions involves:

    33. What are the common documents and records related to the production
    cycle?

    The documents and records involves:

    34. List the audit procedures for the substantive tests of production cycle.
    AUDIT INVESTMENT IN PPE

    35. Elaborate the objective of audit the investment in PPE cycle.

    36. What are the transactions related to the investment in PPE cycle

    Transactions related to the investment in PPE cycle involves:

    37. What are the accounts affected by the investment in PPE cycle transactions.

    The accounts affected by the investment in PPE cycle invoves:

    38. What are the organization functions related to the investment in PPE cycle?

    The organization functions involves:

    39. What are the common documents and records related to the investment in
    PPE cycle?

    The documents and records involves:

    40. List the audit procedures for the substantive tests of investment in PPE cycle.

    AUDIT FINANCING CYCLE

    41. Elaborate the objective of audit the financing cycle.

    42. What are the transactions related to the financing in PPE cycle

    Transactions related to the financing in PPE cycle involves:

    43. What are the accounts affected by the financing cycle transactions.

    The accounts affected by the financing cycle invoves:

    44. What are the organization functions related to the financing cycle?

    The organization functions involves:

    45. What are the common documents and records related to the financing cycle?

    The documents and records involves:

    46. List the audit procedures for the substantive tests of the financing cycle.

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