Q1 Q3

Question 1

Revenue Recognition

Answer 1

Auditor needs to examine the company’s policies and procedures for recognising revenue to ensure they follow the correct auditing standards.
Test - Check sales contracts and invoices to check when revenue is recorded.

Question 2

Inventory Valuation

Answer 2

Assessing the company’s inventory valuation methods to ensure consistency and accuracy.
Test - In person check of inventory to verify existence and condition of inventory as well as testing the valuation of the inventory.

Question 3

Internal Control Environment

Answer 3

Examining how it is setup and used in financial reporting processes.
Test - Reviewing internal audit reports on how well the internal controls are working.