ACCT 4150 Lecture Notes - Lecture 6: Bank Reconciliation, Audit Risk, Revenue Recognition
Document Summary
Audit work is completed in cycles: revenue cycle, Receive order, approve credit, determine whether goods are available, ship, bill, collect cash, recognize effect on other accounts. Otc market (smaller stocks, still have to follow gaap, try to manipulate stock price) Rapid growth: inflating sales, sales commissions, unearned revenue. Change of auditor: talk to auditor and ask about management, concerns and issues, Revenue recognition: more attention to ar and revenue process. Cutting expenses at time of rapid growth through r&d and personnel: talk to employees. Management, one person owns 32% of company and uses another company that is owned by. 50% of the same person (related-party transaction): compare invoices and expenses paid previously by an unrelated vendor. Alternative procedures: cannot get validation in first method and do something different. Bill of lading: shipping document that shows terms and when it was shipped (not an invoice, included in package)
