Make the decision 4 review and complete the

Info icon This preview shows pages 7–23. Sign up to view the full content.

View Full Document Right Arrow Icon
Make the decision. 4 Review and complete the documentation and rationale for the conclusion.
Image of page 7

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

View Full Document Right Arrow Icon
Image of page 8
Financial statement cycles A common form of segmenting is called the cycle approach, which divides classes of transactions and account balances that are closely related into segments. The cycles 1 Revenue and receipts cycle 2 Purchases and payments cycle 3 Payroll and personnel cycle 4 Inventory and warehousing cycle 5 Other assets, equities and liabilities cycle A trial balance is illustrated in Figure 6-5, with accounts categorized by cycle. Cycles applied to the trial balance are illustrated in Table 6-2.
Image of page 9

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

View Full Document Right Arrow Icon
Image of page 10
Image of page 11

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

View Full Document Right Arrow Icon
Image of page 12
Image of page 13

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

View Full Document Right Arrow Icon
Image of page 14
Financial statement cycles (cont.) Relationships among cycles are illustrated in Figure 6-6 below.
Image of page 15

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

View Full Document Right Arrow Icon
Setting audit objectives The most efficient way to conduct audits is to obtain some combination of assurance for each class of transactions and for the ending balances in the related accounts. Audit objectives for each class of transactions include: Transaction-related audit objectives Balance-related audit objectives Presentation and disclosure-related audit objectives. Figure 6-7 presents an illustration of balances and transactions affecting the balances for Accounts Receivable.
Image of page 16
Image of page 17

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

View Full Document Right Arrow Icon
Management assertions Management assertions are implied or expressed representations by management about classes of transactions and the related accounts and disclosures in the financial statements. Assertions by management are directly related to the financial reporting framework (GAAP and IFRS) that forms the criteria that management uses to record and disclose accounting information in financial statements. Management assertions lead to the audit objectives .
Image of page 18
3 Categories of Management assertions Para A124 of ISA 315: identifying and assessing the risks of material misstatement through understanding the entity and its environment identify the assertion as: 1 Assertions about classes of transactions and events 2 Assertions about account balances 3 Assertions about presentation and disclosure
Image of page 19

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

View Full Document Right Arrow Icon
Summary of Management assertions (1)
Image of page 20
Summary of Management assertions (2)
Image of page 21

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

View Full Document Right Arrow Icon
Assertions about classes of transactions 1 Occurrence —Transactions and events that have been recorded have occurred and pertain to the entity 2 Completeness —All transactions and events that should have been recorded have been recorded.
Image of page 22
Image of page 23
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern