RSM 323 Lecture _7 Slides (6 per page)

RSM 323 Lecture_7 - RRR PPP Processes Agenda Recap of Lectures 1 through 6 Overview of the Audit Process Balance Sheet Approach to Auditing Revenue

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
25/10/2010 1 Processes 2 RSM323 Auditing I: Fall 2010 Agenda Recap of Lectures 1 through 6 Overview of the Audit Process Balance Sheet Approach to Auditing Revenue, Receivables and Receipts (RRR) Process Purchases, Payables and Payments (PPP) Process Audit Working Paper Files 3 RSM323 Auditing I: Fall 2010 Recap of Lectures 1 through 6 Quizzes Any questions before moving on? 4 RSM323 Auditing I: Fall 2010 Overview of the Audit Process RSM323 Auditing I: Fall 2010 5 Audit Process 1. Perform Client Acceptance Procedures 2. Obtain an Understanding of the Engagement 3. Plan the Audit 4. Perform the Audit Procedures 5. Form an Opinion 6. Issue the Appropriate Report 6 RSM323 Auditing I: Fall 2010 Balance Sheet Approach to Auditing RSM323 Auditing I: Fall 2010 7
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
25/10/2010 2 B/S Approach to Auditing All the components of the financial statements are articulated You cannot change one number in one statement without changing at least one other statement Therefore, by focusing on gaining assurance about the balance sheet accounts and changes, auditors gain assurance for the rest of the accounts in the financial statements 8 RSM323 Auditing I: Fall 2010 B/S Approach to Auditing The B/S approach to auditing is based on the following equation: Net Income is equal to: Change in Net Assets +/- Net owner contributions This is why, assuming the controls over income statement accounts are operating effectively, analytical procedures are used to substantively audit income statement accounts 9 RSM323 Auditing I: Fall 2010 Revenue, Receivables and Receipts (RRR) Process RSM323 Auditing I: Fall 2010 10 RRR Process Includes transactions related to: Receiving and processing customer orders Granting customers credit Delivering goods and services to customers Billing customers and accounting for accounts receivable Collecting and depositing cash Bank reconciliations 11 RSM323 Auditing I: Fall 2010 RRR Process 12 RSM323 Auditing I: Fall 2010 Understanding the Engagement As part of the understanding of the engagement, the auditors gain an understanding of how the company generates revenues by understanding of the entity and its environment Helps to identify the risks related to the generation of revenues including granting credit to customers and receiving cash 13 RSM323 Auditing I: Fall 2010
Background image of page 2
25/10/2010 3 Understanding the Engagement A more detailed understanding of the RRR process is obtained when auditors gain an understanding of internal control As part of this process, auditors would assess “what could go wrong” at each point of the RRR process to identify risks of material misstatement The auditors will then ensure that the risks are either addressed by the entity’s controls and will test them or will address the risks substantively Occurrence/existence and rights are key risks 14 RSM323 Auditing I: Fall 2010 Understanding RRR Customer Orders
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/09/2011 for the course RSM 323 taught by Professor Lisaharvey during the Spring '11 term at University of Toronto- Toronto.

Page1 / 8

RSM 323 Lecture_7 - RRR PPP Processes Agenda Recap of Lectures 1 through 6 Overview of the Audit Process Balance Sheet Approach to Auditing Revenue

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online