Income Statement Program

Income Statement Program - AP-13 ⇒Audit Program for the...

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: AP-13: ⇒Audit Program for the IncomeStatementCompany Balance Sheet Date The company has the following general ledger account groupings classified in the following captions in the income statement.GeneralLedger Number1AccountDescriptionIncome Statement Component Audit Program for the Income StatementCompany Balance Sheet Date Audit ObjectivesAudit Procedures for ConsiderationN/APerformed byWorkpaper IndexFINANCIAL STATEMENT ASSERTIONSE/O Existence or occurrence. V/A Valuation or allocation.C Completeness. P/D Presentation and disclosure.R/O Rights and obligations.AUDIT OBJECTIVESA. Revenue is for valid transactions in the ordinary course of business that are recorded correctly as to account, amount, and period, and uncollectible amounts, returns, or allowances are adequately provided for (assertions E/O, R/O, V/A, and P/D).B. Recorded revenue includes billings at the correct amount for products shipped or services provided (assertion C).C. Costs of products or services are valid, complete, and recorded correctly as to account, amount, and period (assertions E/O, C, R/O, V/A, and P/D).D. Expenses are valid, complete, and recorded correctly as to account, amount, and period (assertions E/O, C, R/O, V/A, and P/D).E. Revenues, cost of products or services, expenses, and extraordinary, unusual, or infrequent items are properly described and disclosed in the income statement (assertion P/D).IDENTIFICATION CODESThe letters preceding each of the above audit objectives, i.e., A, B, etc., serve as identification codes. These codes are presented in the left column labeled “Audit Objectives” when a procedure accomplishes an objective. If the alpha code appears in a bracket, e.g., [A], [B], etc., the audit procedure only secondarily accomplishes the objective. If an asterisk precedes a procedure, it is a preliminary step or a follow up step that does not accomplish an objective.BASIC AUDIT PROCEDURES*1. Inquire of management or review documentation obtained previously (see CX-3) on the nature of the client’s business and industry and the factors that affect operations. Inquire about any major changes during the period. Obtain an understanding of the client’s revenue recognition policies and determine that they are in accordance with GAAP. Inquire of management about, and evaluate, changes in revenue recognition policies and significant, unusual, and complex transactions occurring at or near year end.Practical Considerations:¯It is important that the auditor understand the business and how it makes money. Discussion with the owner/manager may provide insight on how management views its approach to making a bottom-line profit. The auditor’s understanding normally should include:¯¯The types of products and services sold....
View Full Document

{[ snackBarMessage ]}

Page1 / 20

Income Statement Program - AP-13 ⇒Audit Program for the...

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