Audit Procedures by Transaction Cycle Flashcards
Does the revenue cycle require tracing or vouching?
Vouching
What is the biggest audit concern?
Overstatement of assets or revenues
What reduces risk of overstatement?
Segregation of duties
What are the 3 functions to the segregation of duties?
Authority, recordkeeping, and custody
What can cause of problem with segregation of duties?
Collusion and management override
Using strong internal control, segregationl of the functions in a sales transaction should exist as follows?
Preparation of the sales order, credit approval, shipment, billing, and accounting
What assertion is credit approval?
Valuation
What function is involved in credit approval?
Authority
What function is involved in shipment?
Custody
What function is involved in billing and accounting?
Recordkeeping
Can incoming mail be opened by a person who has access to the accounts receivable ledger?
No
The receipts should be listed in detail and sent to?
Cashier, Accounts receivable department, Accounting department
What should the cashier do with the receipts?
Prepare the bank deposit
What assertions are used when auditing accounts receivable?
Completeness, valuation, allocation, and accuracy, existence and occurrence, and rights and obligations
What assertions are used when auditing sales transactions?
Completeness, cutoff, valuation, allocation, and accuracy, existence and occurrence, and understandability and classification
What assertions are used when auditing presentation and disclosure?
Completeness, valuation, allocation, and accuracy, rights and obligations and occurrence, and understandability and classification
Confirmations generally provide evidence regarding?
Existence and rights and obligations
Does the expenditure cycle require tracing or vouching?
Tracing
What are the functions in a purchase transaction that should be segregated?
Purchase requisition, purchase orders, and receipt of goods or services
Should the purchase order be given to the shipping department with the quantity ordered?
No
What are the 3 functions the accounting department has when pertaining to accounts payable?
Recording the payable, approving the invoice for payment and recording payment after paid by treasurer
What function of segregation of duty deals with recording the payable?
Recordkeeping
What function in segregation of duties deal with approving invoices for payment and recording payment?
Authority
When an invoice arrives, the accounting department approves it by?
Matching the invoice, purchase order, receiving report, and the requisition
Who pays the bill?
Treasury
Should the functions of approving the payment and signing the checks be segregated?
Yes
What are all the treasurer duties dealing with a disbursement?
Prepares, signs, and mails the check and cancels all supporting document after payment
What assertions are used when auditing accounts payable?
Completeness, valuation, allocation, and accuracy, existence and occurrence, and rights and obligations
What procedures is performed for the assertion of completeness when auditing accounts payable?
Search for Unrecorded Liabilities
What assertions are used for auditing purchase transactions?
Completeness, cutoff, valuation, allocation, and accuracy, existence and occurrence, and understandability and classification
What assertions are used when auditing presentation and disclosure?
Completeness, valuation, allocation, and accuracy, rights and obligations and occurrence, and understandability and classification
Does the cash cycle require tracing or vouching?
Vouching
What are the 2 cash cycle fraud schemes?
Lapping and kiting
What assertions are used whern auditing the ending cash balance?
Completeness, valuation and allocation, existence
What assertions are used when auditing cash receipts and cash disbursements?
Completeness, cutoff, valuation, allocation, and accuracy, existence and occurrence, and understandability and classification
Does the inventory cycle require tracing or vouching?
Vouching
Duties that should be segregated in the inventory cycle include?
Purchasing, Receiving, warehouse, and shipping
Should the investment cycle require vouching or tracing?
Vouching
Should property, plant, and equipment cycle require vouching or tracing?
Vouching
Should payroll and personnel cycle require tracing or vouching?
Tracing
Segregation of duties in payroll should include?
Authorization to employ and pay, supervision, timekeeping and cost accounting, payroll check preparation, and check distribution
Whose function is it to hire?
HR
Should financing cycle require tracing or vouching?
Tracing
