AUD 3 Internal Control 12 - Operating / Revenue Cycle Flashcards

Question

ARCC = - Authorization, - Recording, - Custody - Com________

Answer 1

Operating Cycles and the Flow of Transactions ARCC = Authorization, Recording, Custody and Comparison

Answer 2

ARCC = - Authorization, - Recording, - Custody - Comparison

Answer 3

ARCC = - Authorization, - Recording, - Custody - Comparison

Answer 4

ARCC = - Authorization, - Recording, - Custody - Comparison

Answer 5

ARCC = - Authorization, - Recording, - Custody - Comparison

Answer 6

Operating Cycles and the Flow of Transactions An auditor divides the audit down into different cycles that make up the flow of transactions for the entire company. All related accounts within each cycle are audited together. Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of ARCC’S (Authorization, Recording, Custody and Comparison).

Answer 7

Operating Cycles and the Flow of Transactions An auditor divides the audit down into different cycles that make up the flow of transactions for the entire company. All related accounts within each cycle are audited together. Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of ARCC’S (Authorization, Recording, Custody and Comparison).

Answer 8

Operating Cycles and the Flow of Transactions An auditor divides the audit down into different cycles that make up the flow of transactions for the entire company. All related accounts within each cycle are audited together. Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of ARCC’S (Authorization, Recording, Custody and Comparison).

Answer 9

Operating Cycles and the Flow of Transactions Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of ARCC’S (Authorization, Recording, Custody and Comparison). Controls have a function of either Preventing misstatements before they occur (most effective)

Answer 10

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective)

Answer 11

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective)

Answer 12

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective)

Answer 13

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective)

Answer 14

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements

Answer 15

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements

Answer 16

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred

Answer 17

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 18

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 19

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 20

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 21

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 22

Operating Cycles and the Flow of Transactions Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 23

Operating Cycles and the Flow of Transactions An auditor divides the audit down into different cycles that make up the flow of transactions for the entire company. All related accounts within each cycle are audited together. Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of ARCC’S (Authorization, Recording, Custody and Comparison). Controls have a function of either Preventing misstatements before they occur (most effective) or Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 24

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control,

Answer 25

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events

Answer 26

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events

Answer 27

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events

Answer 28

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis

Answer 29

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position.

Answer 30

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position.

Answer 31

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position.

Answer 32

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position.

Answer 33

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position. The auditor will then obtain an understanding of various components

Answer 34

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position. The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 35

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position. The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 36

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position. The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 37

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position. The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 38

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 39

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 40

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 41

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 42

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 43

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 44

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 45

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 46

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 47

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 48

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 49

Operating Cycles and the Flow of Transactions It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 50

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 51

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 52

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 53

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 54

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 55

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 56

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 57

Operating Cycles and the Flow of Transactions In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that occur on an ongoing basis and that affect the entity’s operations or its financial position. The auditor will then obtain an understanding of various components and in particular: ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business.

Answer 58

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction.

Answer 59

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction.

Answer 60

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction.

Answer 61

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction.

Answer 62

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers

Answer 63

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers

Answer 64

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers

Answer 65

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers or when customers call in orders as they identify their needs.

Answer 66

Operating Cycles and the Flow of Transactions • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers or when customers call in orders as they identify their needs.

Answer 67

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance,

Answer 68

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance,

Answer 69

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance,

Answer 70

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance,

Answer 71

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance,

Answer 72

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party

Answer 73

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party

Answer 74

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 75

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 76

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 77

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 78

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 79

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 80

Operating Cycles and the Flow of Transactions • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real.

Answer 81

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • Completion or execution – The entity should have policies and procedures to make certain that

Answer 82

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • Completion or execution – The entity should have policies and procedures to make certain that

Answer 83

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events

Answer 84

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events

Answer 85

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events

Answer 86

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives.

Answer 87

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives.

Answer 88

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives. This will include the flow of documents, services, goods, and other resources throughout the system.

Answer 89

Operating Cycles and the Flow of Transactions • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives. This will include the flow of documents, services, goods, and other resources throughout the system.

Answer 90

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • Recording – The entity should have a system for making certain that

Answer 91

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • Recording – The entity should have a system for making certain that

Answer 92

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position

Answer 93

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position

Answer 94

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position

Answer 95

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records.

Answer 96

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records.

Answer 97

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records.

Answer 98

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records.

Answer 99

Operating Cycles and the Flow of Transactions • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records.

Answer 100

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 101

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 102

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 103

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 104

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 105

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 106

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence.

Answer 107

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as

Answer 108

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order

Answer 109

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order

Answer 110

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order

Answer 111

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order

Answer 112

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods.

Answer 113

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods.

Answer 114

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods.

Answer 115

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods. It may also involve accounting for the sequence of pre-numbered documents,

Answer 116

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets.

Answer 117

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents,

Answer 118

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures,

Answer 119

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures,

Answer 120

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets.

Answer 121

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets.

Answer 122

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets.

Answer 123

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets. These verifications may occur throughout a system.

Answer 124

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets. These verifications may occur throughout a system.

Answer 125

Operating Cycles and the Flow of Transactions • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets. These verifications may occur throughout a system.

Answer 126

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business. ---------------- • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers or when customers call in orders as they identify their needs. • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real. • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives. This will include the flow of documents, services, goods, and other resources throughout the system. • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records. • (Evaluate Defenses) Verifications – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets. These verifications may occur throughout a system.

Answer 127

Operating Cycles and the Flow of Transactions The auditor will then obtain an understanding of various components and in particular: (SACRED) ``` • (Start) Initiation • Authorization • Completion or execution • Recording • (Evaluate Defenses) Verifications ``` It should be easy to remember that a good system of internal control is SACRED to a business. ---------------- • (Start) Initiation – The auditor should determine what event or circumstance initiates a transaction. • Authorization – Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real. • Completion or execution – The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives. This will include the flow of documents, services, goods, and other resources throughout the system. • Recording – The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records. • (Evaluate Defenses) Verification – Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. These verification may occur throughout a system.

Answer 128

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles,

Answer 129

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles,

Answer 130

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles,

Answer 131

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does,

Answer 132

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle,

Answer 133

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle, and whether there is appropriate segregation of duties.

Answer 134

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle, and whether there is appropriate segregation of duties.

Answer 135

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle, and whether there is appropriate segregation of duties.

Answer 136

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle, and whether there is appropriate segregation of duties. The duties to be segregated are the authorization of transactions,

Answer 137

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle, and whether there is appropriate segregation of duties. The duties to be segregated are the authorization of transactions,

Answer 138

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions,

Answer 139

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions,

Answer 140

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions,

Answer 141

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources

Answer 142

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction,

Answer 143

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction,

Answer 144

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction,

Answer 145

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation

Answer 146

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts

Answer 147

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts to the physical resources (ARCC).

Answer 148

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts to the physical resources (ARCC).

Answer 149

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts to the physical resources (ARCC).

Answer 150

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts to the physical resources (ARCC).

Answer 151

Operating Cycles and the Flow of Transactions The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts to the physical resources (ARCC). (Authorization, Recording, Custody and Comparison)

Answer 152

Operating Cycles and the Flow of Transactions When the auditor obtains an understanding of each of the systems applied to recurring transactions, often referred to as cycles, the auditor is concerned with what each specific employee does, the documents they handle, and whether there is appropriate segregation of duties. The duties to be segregated are the authorization of transactions, the recording of those transactions, custody of the resources that are associated with that transaction, and comparison or reconciliation of the recorded amounts to the physical resources (ARCC). ARCC = Authorization, Recording, Custody and Comparison

Answer 153

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur.

Answer 154

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur.

Answer 155

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur.

Answer 156

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur.

Answer 157

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur.

Answer 158

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective,

Answer 159

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective,

Answer 160

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop

Answer 161

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop

Answer 162

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement,

Answer 163

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement,

Answer 164

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud,

Answer 165

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases,

Answer 166

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 167

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 168

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 169

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 170

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 171

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 172

Operating Cycles and the Flow of Transactions Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 173

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it. Other controls are designed to be corrective

Answer 174

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it. Other controls are designed to be corrective

Answer 175

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur

Answer 176

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud

Answer 177

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud

Answer 178

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis.

Answer 179

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis.

Answer 180

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis.

Answer 181

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis.

Answer 182

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations

Answer 183

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement

Answer 184

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement

Answer 185

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement that is cleverly concealed

Answer 186

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement that is cleverly concealed and may identify a misstatement after a negative impact has already occurred.

Answer 187

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement that is cleverly concealed and may identify a misstatement after a negative impact has already occurred.

Answer 188

Operating Cycles and the Flow of Transactions Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement that is cleverly concealed and may identify a misstatement after a negative impact has already occurred.

Answer 189

Operating Cycles and the Flow of Transactions Some controls are considered preventative, designed to minimize the possibility that misstatements will occur. Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it. Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement that is cleverly concealed and may identify a misstatement after a negative impact has already occurred.

Answer 190

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected.

Answer 191

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected.

Answer 192

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected.

Answer 193

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected.

Answer 194

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected.

Answer 195

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected.

Answer 196

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 197

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 198

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 199

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 200

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 201

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 202

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales,

Answer 203

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system,

Answer 204

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system, and a credit to accounts payable.

Answer 205

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system, and a credit to accounts payable.

Answer 206

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system,

Answer 207

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system,

Answer 208

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system,

Answer 209

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system, and a credit to accounts payable.

Answer 210

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system, and a credit to accounts payable.

Answer 211

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system, and a credit to accounts payable.

Answer 212

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales, while the purchasing cycle will result in a debit to purchases in a periodic system, or to inventory in a perpetual system, and a credit to accounts payable. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 213

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 214

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 215

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 216

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 217

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 218

Operating Cycles and the Flow of Transactions When evaluating the system for a particular cycle, the focus will be on the accounts balances or classes of transactions that are affected. For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions.

Answer 219

Operating Cycles and the Flow of Transactions For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions. • A requirement that each recorded sale be supported by an order signed by a customer

Answer 220

Operating Cycles and the Flow of Transactions For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions. • A requirement that each recorded sale be supported by an order signed by a customer

Answer 221

Operating Cycles and the Flow of Transactions • A requirement that each recorded sale be supported by an order signed by a customer

Answer 222

Operating Cycles and the Flow of Transactions • A requirement that each recorded sale be supported by an order signed by a customer supports management’s assertion of occurrence

Answer 223

Operating Cycles and the Flow of Transactions • A requirement that each recorded sale be supported by an order signed by a customer supports management’s assertion of occurrence

Answer 224

Operating Cycles and the Flow of Transactions • A requirement that each recorded sale be supported by an order signed by a customer supports management’s assertion of occurrence in that having a signed purchase order provides evidence that a sale did occur.

Answer 225

Operating Cycles and the Flow of Transactions • A requirement that each recorded sale be supported by an order signed by a customer supports management’s assertion of occurrence in that having a signed purchase order provides evidence that a sale did occur.

Answer 226

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence

Answer 227

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence

Answer 228

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence

Answer 229

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness

Answer 230

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness

Answer 231

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness in that tracing all sales orders to the accounting records

Answer 232

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness in that tracing all sales orders to the accounting records

Answer 233

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness in that tracing all sales orders to the accounting records will provide evidence that all sales transactions have been recorded.

Answer 234

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness in that tracing all sales orders to the accounting records will provide evidence that all sales transactions have been recorded.

Answer 235

Operating Cycles and the Flow of Transactions • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness in that tracing all sales orders to the accounting records will provide evidence that all sales transactions have been recorded.

Answer 236

Operating Cycles and the Flow of Transactions For the account affected, the auditor will evaluate whether or not a step or process within the system supports one or more of management’s assertions. • A requirement that each recorded sale be supported by an order signed by a customer supports management’s assertion of occurrence in that having a signed purchase order provides evidence that a sale did occur. • A policy that the accounting clerk notify a supervisor whenever an internally generated sales order is presented out of sequence supports the assertion of completeness in that tracing all sales orders to the accounting records will provide evidence that all sales transactions have been recorded.

Answer 237

Are all related accounts within each cycle audited together or separately? Answer: All related accounts within each cycle are audited together

Answer 238

An auditor divides the audit down into different cycles that make up the flow of transactions

Answer 239

An auditor divides the audit down into different cycles that make up the flow of transactions

Answer 240

An auditor divides the audit down into different cycles that make up the flow of transactions

Answer 241

An auditor divides the audit down into different cycles that make up the flow of transactions

Answer 242

An auditor divides the audit down into different cycles that make up the flow of transactions for the entire company.

Answer 243

Within each cycle, the auditor is concerned with what each specific employee does,

Answer 244

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle

Answer 245

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of duties

Answer 246

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of duties

Answer 247

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of duties (ARCC) ARCC = Authorization, Recording, Custody, Comparison

Answer 248

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of duties (ARCC) ARCC = Authorization, Recording, Custody, Comparison

Answer 249

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of duties (ARCC) ARCC = Authorization, Recording, Custody, Comparison

Answer 250

Within each cycle, the auditor is concerned with what each specific employee does,

Answer 251

Within each cycle, the auditor is concerned with what each specific employee does,

Answer 252

Within each cycle, the auditor is concerned with what each specific employee does, the documents they handle and how each document relates to the segregation of duties

Answer 253

Within each cycle, the auditor is concerned with what each specific employee does,

Answer 254

ARCC = Authorization, Recording, Custody, Comparison

Answer 255

ARCC = Authorization, Recording, Custody, Comparison

Answer 256

ARCC = Authorization, Recording, Custody, Comparison

Answer 257

ARCC = Authorization, Recording, Custody, Comparison

Answer 258

ARCC = Authorization, Recording, Custody, Comparison

Answer 259

ARCC = Authorization, Recording, Custody, Comparison

Answer 260

ARCC = Authorization, Recording, Custody, Comparison

Answer 261

ARCC = Authorization, Recording, Custody, Comparison

Answer 262

What is a function of internal control? Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 263

What is a function of internal control? Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 264

What is a function of internal control? Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 265

What is a function of internal control? Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 266

What is a function of internal control? Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 267

Which function of internal control is the most effective? Answer: 1) Preventing misstatements --------------------- Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 268

Which function of internal control is less expensive to implement function of internal control? Answer: 2) Detecting and Correcting misstatements --------------------- Controls have a function of either 1) Preventing misstatements before they occur (most effective) or 2) Detecting and Correcting misstatements that have already occurred (less expensive to implement, but could detect too late).

Answer 269

"The auditor should determine what event or circumstance initiates a transaction. Sales transactions, for example, may be initiated when the entity’s sales force make calls to their regular customers or when customers call in orders as they identify their needs." • (Start) Initiation

Answer 270

Before an entity will commit resources to meet its obligations in a transaction or to respond to an event or circumstance, it will want to determine that the counterparty to the transaction is a legitimate party with the intent and ability to perform or that the event or circumstance is real. • Authorization

Answer 271

"The entity should have policies and procedures to make certain that its obligations in transactions and its responses to recurring events and circumstances are being performed in accordance with management’s directives. This will include the flow of documents, services, goods, and other resources throughout the system." • Completion or execution

Answer 272

The entity should have a system for making certain that all transactions, events, or circumstances that affect operations or financial position are properly captured and reflected in the entity’s financial records. • Recording

Answer 273

"Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. This may involve policies such as those requiring the shipping department to compare a customer’s purchase order with an internal sales order and to a list of goods transferred from stores before shipping the goods. It may also involve accounting for the sequence of pre-numbered documents, checking for authoritative signatures, or periodically reconciling recorded amounts to physical assets. These verifications may occur throughout a system." • (Evaluate Defenses) Verifications

Answer 274

"Each system should have checks and balances to make certain that each function within the system is performed properly and in the appropriate sequence. These verifications may occur throughout a system." • (Evaluate Defenses) Verifications

Answer 275

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events

Answer 276

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 277

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events

Answer 278

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events

Answer 279

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 280

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 281

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 282

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 283

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 284

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 285

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 286

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 287

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 288

In obtaining an understanding of an entity’s internal control, the auditor will identify the different types of transactions or events that 1) occur on an ongoing basis and that 2) affect the entity’s operations or its financial position.

Answer 289

Why a preventative approach is not always feasible to develop controls that will be effective at preventing a misstatement? Answer: Cost/ Benefit Consideration The cost of developing an effective preventative control will exceed the benefit that can be derived from it. ----------------- Although a preventative approach has the tendency to be the most effective, it is not always feasible to develop controls that will be effective at preventing a misstatement, particularly one that results from fraud, and in many cases, the cost of developing an effective preventative control will exceed the benefit that can be derived from it.

Answer 290

What are limitations of corrective approach type of controls? Answer: The corrective controls may not be effective for a fraudulent misstatement that is cleverly concealed and may identify a misstatement after a negative impact has already occurred. ----------- Other controls are designed to be corrective in that they are designed to identify misstatements that may occur due to errors or fraud and establish a means of correcting them on a timely basis. These, of course, have their limitations in that they may not be effective for a fraudulent misstatement that is cleverly concealed and may identify a misstatement after a negative impact has already occurred.

Answer 291

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 292

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 293

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 294

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 295

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 296

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 297

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 298

The revenue cycle will generally result in a debit to cash or accounts receivable and a credit to sales.

Answer 299