Chapter 16 Slides

Chapter 16 Slides - 16 - 1 Click to edit Master subtitle...

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Unformatted text preview: 16 - 1 Click to edit Master subtitle style Acct 4510/5510 16 - 1 Completing the Tests in the Sales and Collection Cycle: Accounts Receivable Chapter 16 11 Acct 4510/5510 16 - 2 Acct 4510/5510 Learning Objective 1 Describe the methodology for designing tests of details of balances using the audit risk model. This objective relates to Phases I and II in the audit process. 22 Acct 4510/5510 16 - 3 Acct 4510/5510 Methodology for Designing Tests of Details of Balances Accounts Receivable Identify client business risks affecting accounts receivable Set tolerable misstatement and assess inherent risk for accounts receivable Assess control risk for sales and collection cycle Design and perform analytical procedures for accounts receivable balance Design and perform tests of controls and substantive tests of transactions for sales and collection cycle Audit procedures Sample size Items to select Timing Design tests of details of accounts receivable balance to satisfy balance-related audit objectives 33 Acct 4510/5510 Phase I Phase III Phase II Phase III 16 - 4 Acct 4510/5510 Accounts Receivable Balance-related Audit Objectives 1. Detail tie-in 7. Realizable value 5. Classification 4. Accuracy 2. Existence 8. Rights 3. Completeness 6. Cutoff 44 Acct 4510/5510 Remember These eight general objectives are the same for all accounts. They are called AR balance-related audit objectives because we are working with accounts receivable. 16 - 5 Acct 4510/5510 Relationship Between Sales and Accounts Receivable in Two Primary Classes of Transactions Accounts Receivable Balance-related Audit Objectives Translation-Related Audit Objectives Sales Occurrence Completeness Accuracy Posting and summarization Classification Timing Detail tie-in Existence Completeness Accuracy Classification Cutoff Realizable value Rights 55 Acct 4510/5510 16 - 6 Acct 4510/5510 Relationship Between Sales and Accounts Receivable in Two Primary Classes of Transactions Translation-Related Audit Objectives Cash receipts Occurrence Completeness Accuracy Posting and summarization Classification Timing Detail tie-in Existence Completeness Accuracy Classification Cutoff Realizable value Rights 66 Acct 4510/5510 Accounts Receivable Balance-related Audit Objectives 16 - 7 Acct 4510/5510...
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This note was uploaded on 04/11/2010 for the course ACCT 4510 taught by Professor Lord during the Spring '10 term at Bowling Green.

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Chapter 16 Slides - 16 - 1 Click to edit Master subtitle...

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