1. Chapter 16 Completing the Tests in the Sales and Collection Cycle
Accounts Receivable

2. The introduction
… she discovered that a new real-time system for processing sales transactions had been implemented
Susan’s substantive tests of transactions identified misstatements.

3. Analytical Procedures - Planning
page 424

4. Analytical Procedures - Planning

5. Jane
What is the objective of AU-C section 500?

6. AU-C 500 Audit Evidence
.04 The objective of the auditor is to design and perform audit procedures that enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion.

7. Kirissa
describe the audit risk model ?

8. Audit Risk Model

9. Michelle
How does detection risk get reduced ?

10. Felix pretend GAAS requires AAR ≤ .05
Controls are ineffective, we assess CR (RoMM) as MAX
Which audit approach are we going to take ?

11. Dorian pretend GAAS requires AAR ≤ .05
Controls are ineffective, we assess CR as MAX (1.00)
We are taking the Primarily Substantive Approach
What is the Planned Detection Risk ?

12. Danny pretend GAAS requires AAR ≤ .05
Controls are effective, not great but
Somewhat effective and
we assess CR (RoMM) as 0.25
What is the Planned Detection Risk ?

13. Hailee pretend GAAS requires AAR ≤ .05
Controls are effective, not great but
somewhat effective and
we assess CR (RoMM) as 0.25
Which audit approach will we take?

14. John pretend GAAS requires AAR ≤ .05
Controls are effective, we assess CR (RoMM) as 0.03
Which audit approach will we take ?

15. Haley This is a bit of a trick question
pretend GAAS requires AAR ≤ .05
Controls are effective, we assess CR (RoMM) as 0.03
We will take the Reduced Level of Control Risk Approach
What is the Planned Detection Risk ?

16. Cole
Which assertions relate to Account Balances?

17. Table 6-3
Page 159 (166)

18. Max
Describe Vouching
Describe Tracing

19. Navid If we are auditing assets or sales are we most concerned with
overstatement or understatement

20. Genna If we are auditing LIABILITIES or EXPENSES
are we most concerned with
overstatement or understatement

21. Stephanie If we are auditing Accounts Receivable
are we most concerned with
Existence or Completeness

22. Jenna If we are auditing Cash Receipts are we most concerned with
Occurrence or Completeness

23. Sammie If we are auditing CASH DISBURSEMENTS
are we most concerned with
Occurrence or Completeness

24. Mitchell
what are the three types of substantive tests?

25. Analytical Procedures - Substantive

26. aged trial balance
page 532 (426)

28. Kyle
with which financial statement assertion might the aged trial balance be helpful ?
Figure 3 page 532 (426)

31. Sofia
which opinion do we issue
while attempting to confirm the client’s accounts receivables – the client will not provide you the necessary information to confirm many of their largest customers

32. Mark
what are two forms of
receivables confirmations ?

33. forms of receivables confirmations ?
positive p 539 (433)
blank form
negative p 540 (434)

36. Maintaining control of the confirmation process

37. alternative procedures --- p. 541 (436) subsequent cash receipts Or
Vouch from Acc Rec Trial Balance (subsidiary ledger)
to Invoice
to Shipping Doc
to Sales Order
to Customer Order or Purchase Order

38. page 545 (439)
Valuation & allocation
Valuation & allocation

39. Valuation & allocation

40. Accounts Receivable cut-off 12-31-17

41. Hannah Accounts receivable
Are you going to audit the last 25 entries prior to 12/31/17 or
the first 25 entries after 1/1/18

42. will you
Vouch or Trace ?

43. Malcolm
what does the evidence indicate if we Vouch the last 25 entries in the Accounts Receivable account to shipping documents prior to 12/31/17

44. Mikey
what does the evidence indicate if we Vouch the last 25 entries in the Accounts Receivable balance to shipping documents dated after 1/1/18

45. shipping documents accounts receivables (& sales) cut-off
at the loading dock

46. shipping documents
goods shipped in
2017
2018

47. Julia L
do you want to audit the last 25 orders that were actually shipped prior to 12/31/17 or
the first 25 orders that were shipped on January 1, 2018

48. Laura
will you
Vouch or Trace ?

49. Nik what would the evidence indicate if you traced
the first 25 shipments of 2018
into the 2018 Accounts Receivable balance

50. Austin what would the evidence indicate if you traced
the first 25 shipments of 2018
into the 2017 Accounts Receivable balance

51. the client refuses to adjust their
Courtney
what opinion do we issue
while performing substantive tests you detect material misstatements that cause accounts receivable to be materially overstated
the client refuses to adjust their
financial statements

52. Julia B
what does it imply about the effectiveness of the internal controls
while performing substantive tests you detect material misstatements that cause accounts receivable to be materially overstated

53. Cash cut off

54. Jane Cash Receipts Journal
Are you going to audit the last 25 entries in CR Jnl the prior to 12/31/17 or
the first 25 entries in the CR Jnl after 1/1/18

55. Kirissa
cash receipts - will you
Vouch or Trace ?

56. Michelle cash receipts other than cutoff
with which financial statement assertion are we most concerned if we are auditing cash receipts as of Dec. 31st?

58. Felix
cash receipts
Vouching the last 25 entries in the cash receipts journal prior to 12/31/17 ?
Describe evidence that indicates the recorded balance is correct

59. Dorian
cash receipts
Vouching the last 25 entries in the cash receipts journal prior to 12/31/17?
Describe evidence that indicates the recorded balance is overstated

60. Danny Cash Disbursements Journal
will you audit the last 25 entries in the CD Jnl prior to Dec. 31st or
the first 25 entries in the CD Jnl after Jan 1st 2018

61. Hailee cash disbursements
with which financial statement assertion (other than cutoff) are we concerned if we are auditing cash disbursements ?

63. John cash disbursements
Vouching the first 25 entries in the cash disbursements journal after 1/1/2018 ?
Describe evidence that indicates the recorded balance is correct

64. Haley cash disbursements
Vouching the first 25 entries in the cash disbursements journal after 1/1/2018 ?
Give an example of evidence that indicates the recorded CASH balance is overstated