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Chapter 14 - Chapter 14 Auditors Process in Considering...

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Chapter 14
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Auditor’s Process in Considering Tests of Controls and Substantive Tests of Details of Tx Obtain an understanding of internal controls over processing of transactions Identify key controls and deficiencies and link to audit assertions and objectives Assess control risk (preliminary) for each assertion/objective Design tests of controls and substantive tests of details of tx to be performed as dual-purpose tests Assess control risk (“final”)
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Obtaining an Understanding Understand the transactions, accounts, journals and ledgers involved in the cycle Transactions Accounts Journals Ledger/Master File Accounts Receivable
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Credit Sale Transaction Transaction timeline Taking customer order--Sales order Approving credit Picking goods Shipping Goods—bill of lading or shipping document (economic event) Billing customer—Sales Invoice Recording Transaction (journal entry in the Sales Journal and the updating of A/R master file, triggered by the sales invoice)
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