Operating Cycles

Question 1

Define Operating Cycles

Answer 1

W/I each cycle auditor is concerned with what each specific employee does, documents they handle, and how each documents related to seg. of ARCC.

Controls have functions to Prevent or Detect and Correct

Question 2

PPN

Answer 2

Preprinted
Prenumbered
Numerically Controlled
Multiple Copies

Question 3

Operating Cycles Financial Statement Assertions

Answer 3

U-PERCV
Understandability & Classification
Presentation & Disclosure
Existence or Occurrence (Vouching)
Rights & Obligations
Completeness (Tracing) & Cutoff
Valuation, Allocation, & Accuracy

Question 4

Tracing

Answer 4

Existence

Source —> Books

Question 5

Vouching

Answer 5

Completeness

Books —> Source

Question 6

Spending Cycle

Answer 6

Purchases, AP, Cash Disbursements
Physical Controls
Recording
Authorization
Independent Checks
Segregation of Duties
Evaluate Performance

Question 7

Revenue Cycle

Answer 7

Sales Revenue, AR, Cash Receipts

Question 8

Service Organization (Payroll Processing)

Answer 8

TofC in place at client
TofC in place at service organization
Report on whether controls have been implemented and controls operating effectiveness
Get Report from other Auditor
Reference to the service covered by report
Description of the Scope and nature of procedures performed
ID party specifying objectives
ID purpose of engagement
ID parties intended use
A service auditor should inquire of management about subsequent events