Chapter 12 Power Point

Chapter 12 Power Point - Chapter 12 Auditing Acquisitions...

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Chapter 12 Prepared by Adrianne E. Slaymaker, D.B.A. CPA Auditing Acquisitions and Payments Processes: Cash Disbursements and Related Activities in the Automotive Industries
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THE AUTOMOTIVE INDUSTRY: AN OVERVIEW Learning Objective #2 The industry term for the large companies that we usually think of as the leaders in the industry is automotive Original Equipment Manufacturers (OEM).
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AUDITING ACQUISITIONS AND PAYMENTS IN THE AUTOMOTIVE INDUSTRY Learning Objective #1 Businesses in the automotive industry usually have a high volume of inventory purchase transactions for many different items and from multiple vendors. Assuming an automotive industry client has good ICFR, the most challenging consideration for testing expenses or assets and related accounts payable and cash disbursements is the large volume of transactions. Many automotive companies engage in global purchase and sale activities. Consequently, the companies receive or extend payment for transactions using foreign currencies. This exposes the companies to foreign currency exchange risks.
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Inherent Risks Unrecorded purchase agreements Unrecorded accrued (estimated) liabilities Unrecorded contingent liabilities Non-cancelable purchase agreements Capitalizing expenses
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Documents and Processes Learning Objective #3 The purchase requisition, purchase order, receiving report, and vendor invoice or statement comprise a payment voucher package. The payment voucher packages goes through an
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Chapter 12 Power Point - Chapter 12 Auditing Acquisitions...

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