AuditExam4

• 1 Reporting Requirements-no requirement for an audit of interal controls
• 2 Extent of required internal controls-management is responsible for establishing interal controls
• 3 Extent of understanding needed-only to obtain a sufficient understanding
• 4 Assessing control risk-preliminary assessment of control risk maximum
• 5 Extent of tests of controls needed

• 1 Reliability of financial reporting
• 2 Efficiency & effectiveness of operations
• 3 Compliance with laws & regulations

• 1 Adequate separation of duties
• 2 Proper authorization of transactions & activities
• 3 Adequate documents & records
• 4 Physical control over assets & records
• 5 Independent checks on performance

• 1 Identify the existing controls
• 2 Identify the absence of key controls
• 3 Consider the possibility of compensating controls
• 4 Decide whether there is a significant deficiency or material weakness
• 5 Determine potential misstatements that could result

• Obtain an aged list of receivables;
• Trace amounts to master file
• Foot schedule
• Trace to G/L

• Obtain analysis of allowance & bad debt
• Test accuracy
• Examine authorization for write-offs
• Trace to G/L

• Obtain direct confirmation of A/R
• Perform alternative procedures for nonresponses

• Review A/R control account for period
• Investigate unusual entries
• Investigate significant +/- sales at Y/E

Review receivables for any that have neen assigned or discounted

Investigate collectibility of account balances

Review lists of balances for amounts due from related parties or employees, credi balances & unusual items as well as notes receivable due after 1 year

Determine that proper cutoff procedures were applied at the B/S date to ensure that sales, cash receipts, & credit memos have been recorded in the correct period