Unit 4 Flashcards
(27 cards)
What department of a company puts together the sales orders
the sales department
What department of a company approves sales orders
the credit department
What department of a company prepares the bill of lading
the shipping department
What department of a company prepares the invoices
the billing department
What department of a company approves write-offs of uncollectable accounts
the treasurers department
A listing of cash receipts should be sent to which three departments
the cashier, AR (Billing), and General Accounting Departments should each receive a copy of the cash receipt listing
Can you tell me what is the difference between a positive, negative, and Blank confirmation
A positive confirmation is one where the customer is required to return confirmation to the auditor
A negative confirmation is where the customer should reply only if something is incorrect
A blank confirmation does not include a balance, and makes the person provide it to provide greater assurance
What department of a company prepares the purchase order
the purchasing department
What department of a company prepares the receiving report
the receiving department
What department of a company records the payable and approves the invoice
the accounts payable department
What department of a company signs and mails checks
the treasurers department
what documents should be compared before an invoice is approved for payment
The purchase order, receiving report, and vendor invoice should be compared before an invoice is approved for payment
Name some of the common audit procedures related to the expenditure cycle
Performing a search for unrecorded liabilities (completeness)
AP confirmations (existence)
Examination of purchases before and after YE (Cutoff)
Define lapping
delaying the recording of cash receipts to conceal the theft for cash
Define Kiting, and how would Kiting be found
Kiting is the overstatement of bank balances by transferring cash between banks and reporting the amounts in both bank balances simultaneously
it can be detected by reviewing each transfer and the auditor is looking for a disbursement date after year end and a receipt date after year end
What functions should be segregated related to payroll and personnel
ARC
Authorization (HR, supervisory staff, timekeeping)
Record keeping (Payroll)
Custody of assets (Treasury)
What is the going concern period for FS under FASB & GASB
FASB: one year after the date the FS are issued
GASB: one year beyond the date if the FS
Evidence from what auditing procedures may lead the auditor to conclude that there is significant doubt about an entitys ability to continue as a going concern.
ADMITS!
Analytical procedures Debt compliance Minutes Inquiry of clients legal council Third parties Subsequent events
What conditions and events may indicate substantial doubt about an entity’s ability to continue as a going concern
FINE
Financial difficulties
Internal matters such as labor difficulties, substantial dependence on a particular project etc..
Negative trends
External matters
What phrases must be included in a going concern emphasis of matter (or explanatory) paragraph
Substantial Doubt
and
Going concern
What is included in a rep letter and who signs it
it includes info relating to the: FS, completeness, fraud, related party transactions, recognition, subsequent events
and it is signed by the CEO, CFO and any other members of management who has responsibility
What is an integrated audit and when do you need to do an integrated audit
it is an audit that requires both an audit of the FS and internal controls. These audits need to be performed together and two opinions.
It is required for all issuers, and when an auditor is engaged to examine the internal control of a non issuer
In a financial statement audit, the auditor is required to obtain and understanding of the design and implementation of internal control, but is not required to do what
They are not REQUIRED to evaluate operating effectiveness as part of obtaining an understanding through a test of controls
How do you calculate the upper deviation rate
Sample Deviation Rate + Allowance For Sampling Risk = Upper Deviation Rate
