ACC 521 Study Guide - Final Guide: Audit Risk, Trial Balance, Contingent Liability
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8 Feb 2015
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Understanding the revenue, receivables and receipts process: the auditor must understand the business"s method of generating revenues and use of them in operations in order to assess the business risk and risk of misstatement. Risk assessment for revenues, receivables and receipts: the auditor considers risks in revenue and cash receipt transactions and accounts receivable balances, assess risks in management"s assertions regarding existence, ownership, completeness, valuation and disclosure. Control considerations in the revenue, receivables and receipts process. Identify client"s controls over sales revenues, receivables, and cash receipts and cash. Balances: consider the client"s policies, procedures and methods of , authorization, custody, record keeping, reconciliation. Physical custody of inventory starts with the stockroom or warehouse where inventory is kept: custody is transferred to the shipping department on the authorization of the packing slips. If stock keepers or shippers have the ability to change quantities shown on packing slips, a weakness in separation of duties is created.
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