identify and test controls for cash
identify and test controls for the revenue and collection cycles
Test of cash is an audit producer whuch is use by auditor to test the effectiveness of a control used by any Client to prevent misstatement . Depending upon the result of the test auditor may rely on the effectiveness of test which is used by his Client, if he found that controlls are weak in that case the auditor may enhance their use of substensiv testing which will ultimately increse the cost of test.
A auditor to try to assess the inherent risk which is associated with the revenue cycle and then perform test to ensure it should be free of errors and fraud such kind if error are occurred due to cutoff date of sales and under the pressure of management to misstatement revenue .In such case a auditors may provide some assurance that how the revenue of the company can record more accurately
Recignition of isses -First o all the audito try to find out all the isues related to the sales or sales return an consignment related issues he also try to find out is there any misstate in revenue wich may occur due to th presure of management or to impres top management.Apart from this issue there may be some common issues like recording of transaction or any mistake in amount etc.
Analytical procedures-Analytical procedure include running various financial ratios and comparing these ratios to industry benchmark.In this process the auditor examine the gross profit margin and the amou of growthwhic a company experienced in one year .He also try to calculate all the expenditure ofthe company and he ensure that it should not be more than the revenue of the cmpany otherwise company may from cash crises in future.
Test of controls -It is most important part of internal contoll of an organization .In test of control the auditor examine all the person who approved credit sales shipping and recording sales orders etc.
Sustantive test- These test include the checking the trail balance , receivable amout , bills of payments thay also include sales ,sales return and cash receipts .He examine all the related documents to determine accuracy .
identify and test controls for cash identify and test controls for the revenue and collection cycles
After assessing internal controls are being effective in the sales and collection cycle, the auditor can assume that internal controls will be effective at each of the client’s other transaction cycles. True or False
20) In a revenue cycle with proper controls, the involved in any cash handling activities. A) accounts receivable clerk, treasurer B) accounts receivable clerk; controller C) cashier, controller D) cashier; treasurer who reports to the is not 21) A serious exposure in the revenue eyele is loss of assets. What is the related applicable control procedure that address this exposure? A) shipping errors: reconciliation of sales order with picking ticket and packing B) theft of cash; segregation of duties and...
11A–1.A summary of the controls for the revenue and cash receipts cycle of Keystone Computers & Networks, Inc., appears in this appendix.For the following three controls over sales, indicate one type of error or fraud that the control serves to prevent or detect. Organize your solution as follows:ControlError or Fraud ControlledApplication controls are applied when customer orders are entered by the sales order clerk.The computer assigns numbers to sales invoices when they are prepared.Monthly statements are mailed to customers.For the...
List the weaknesses and suggest improvements in internal controls related to revenue cycle. Identify weaknesses in the internal control structure relating to the activities of 1) warehouse clerk 2)bookkeeper #1 3)bookkeeper #3 4)collection clerk SALES CLERK WAREHOUSE CLERK BOOKKEEPER #1 BOOKKEEPER #2 COLLECTION CLERK RECEIVES CUSTOMER ORDER BY PHONE APPROVED SALES ORDER 1 SALES ORDER SALES ORDER INVOICE CUSTOMER CHECK FROM MAIL CLERK 2 1 INVOICE 3 PREPARES 4-COPY SALES ORDER PREPARES SHIPPING ADVICE AUTHORIZED CUSTOMER'S CREDIT MATCHES INV &...
Assume the auditor plans to test controls over the shipment and recording of sales transactions. Identify the controls that the auditor would expect to find to achieve the objective that all transactions are recorded correctly, and in the correct period. For each control identified, indicate how the auditor would test whether the control operated effectively
identify what type of internal controls would ensure proper classification of cash equivalents. How would that fit into the company's overall system of internal controls over cash? Use examples to illustrate your position, and be sure to cite GAAP to support your claims.
Audit of the sales and collection cycle based on chapter 13 3. Understand internal control, and design and perform tests of controls and substantive test of transactions for sales 4. Understand internal control, and design and perform tests of controls and substantive test of transactions for cash receipts Audit of the sales and collection cycle based on chapter 13 3. Understand internal control, and design and perform tests of controls and substantive test of transactions for sales 4. Understand internal...
Wong has the following internal controls over cash receipts and cash payments. Identify the control activity that is applicable to each item in the table shown below: All cash is deposited intact, in the bank account, daily. Segregation of Duties/Independent checks of performance/Documentation procedures/Physical and it control/ Establishment of responsibility/Human Resource Controls Blank cheques are stored in a safe in the controller’s office. Segregation of Duties/Independent checks of performance/Documentation procedures/Physical and it control/ Establishment of responsibility/Human Resource Controls All cashiers...
The transparent adhesive tape test (sometimes called a "Scotch tape" test) refers to the collection and examination of a sample from the skin around the anus and is used to identify pinworms and pinworm eggs True O False
Identify one of the objectives of internal controls.