Revenue (3)

Question 1

What can be done as well as analytical procedures?

Answer 1

Auditors may feel that they need to carry out a directional test on completeness of recording of individual sales in accounting records

Question 2

1st step of a directional test?

Answer 2

Auditors should start with documents that first received revenue (GDNs)

Question 3

2nd step of a directional test?

Answer 3

Trace revenue recorded in these through intermediate documents such as sales summaries to sales ledger

Question 4

What must auditors ensure?

Answer 4

Population of documents from which the sample is originally taken is itself complete, done by checking for example the completeness of sequence of GDNs

Question 5

Revenue breakdown month basis (completeness)

Answer 5

Obtain a breakdown of revenue for period on a month by month basis, a product by product basis and/or per customer and compare to prior period/budget

Question 6

Revenue gross product data (completeness)

Answer 6

Compare the gross product percentage by product line with previous year and/or industry data