Chapter _10, AR & other audit areas

Chapter _10, AR & other audit areas - May 1997 CPA Exam...

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May 1997 CPA Exam Questions Write audit program for A/R (ESSAY) “OOF”-- audit reports, compilation & review reports, special reports, other reports “OOF” -- I/C, specifically tests of controls “OOF” -- ‘assertions’
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Generic Audit Procedures for Each “Assertion” Existence/occurrence -- regarding validity of recorded items (especially for assets) Confirmation (cash, A/R, some inventory) Observation (inventory held by client) Vouch to underlying documents (e.g., as an alternate procedure for A/R) Completeness -- regarding omissions (especially for liabilities) “Cutoff tests” -- trace from the underlying documents to the recorded F/S elements) Analytical procedures --applicable to every audit area!
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Generic Audit Procedures (Continued) Rights & obligations Cutoff tests are applicable, too Examine authorization of transactions (looking for any unusual circumstances) Valuation or allocation Verify mathematical accuracy (verify that detailed records support the G/L balance) Recalculate account balances (for some accts) Trace subsequent C/R or C/D to journals, etc. Review client’s estimates for reasonableness
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Generic Audit Procedures (Continued) Presentation & disclosure Inquire of client personnel (about compensating balances with banks; use of assets as collateral for debt; management representation letter should document these inquiries, along with “subsequent events”) Review disclosures (for adequacy and consistency with GAAP, per accounting standards)
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This note was uploaded on 04/22/2011 for the course ACCY 360 taught by Professor T during the Spring '08 term at Northern Illinois University.

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Chapter _10, AR & other audit areas - May 1997 CPA Exam...

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