Management and Organizational Studies 3363A/B Chapter Notes - Chapter 13: Audit Evidence, Gross Margin, Credit Risk

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3363A/B
• Professor: Michelle Loveland

Document Summary

Completing the tests in the sales and collection cycle: accounts receivable. Revenue has been recorded when goods have not been delivered. Nature of related parties is not described with enough detail. 431 for examples of different risk levels: tests of details of balances for all cycles emphasize balance sheet accounts, and income statement accounts are verified more as a by-product of the balance sheet tests. If the auditor finds account receivable balances are overstated due to mistakes in billing customers, there are overstatements in both the balance sheet and income statement. Independent of the company being audited: competent and has knowledge about the account. Internal controls strong: there are many small, homogenous balances, there is no evidence or suspicion of fraud or serious error; and, there is an expectation that the negative confirmations will be read and considered. Example of an accounts receivable audit: there is a case illustration of auditing accounts receivable with hillsburg hardware limited (pp.