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Source of Evidence to Cash Handling & Internal Controls
- Bank transfer schedules
- Bank confirmations
- Bank reconciliations
- Cutoff bank statements
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Expenditure Cycle - Purchase
- Purchase (A)
- Requisitioning Dept (A)
- Receiving (C)
- A/P (R)
- Treasurer (R)
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Revenue Cycle - Collections
- Mailroom (C)
- Cashier (C)
- A/R (R)
- Accounting (R)
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Revenue Cycle - Sales
- Sales (A)
- Credit (A)
- Treasury (A)
- Shipping (C)
- Billing (R)
- Accounting (R)
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Report Release Date vs. Documentation Completion Date
- Public Co. + 45 days
- Private Co. + 60 days
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Types of Audit Evidence
Underlying Accounting Records: initial entries and any supporting records (Tests through analytical procedures & substantive tests)
- Corroborating Evidence: includes minutes of meetings, confirmations
- (Obtained through observation, inquiry, and inspection; Gives validity to the recorded accounting data)
Evidence in Electronic Form: may not be retrievable indefinitely
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Evidence Hierarchy (Reliability of Evidence) - AEIO"U"
- Auditor observation & knowledge
- External evidence
- Internal evidence
- Oral evidence
- U know it!
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Substantive Procedures
Evaluate mgt. assertions; Detect material mistatement
Inspection, Observation, Inquiry, Confirmation, Recalculation, Reperformance
- Test of Details: 1. Performed on ending balances
- 2. The details of transactions
- 3. Combo of the two
- Analytical Procedures
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11 Standard Auditing Procedures (FIVE CARROTS)
- Footing, crossfooting, recalculation
- Inquiry
- Vouching
- Examination/Inspection
- Confirmation
- Analytical procedures
- Reperformance
- Reconciliation
- Observation
- Tracing
- Subsequent event review
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