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1 Chapter 16 Completing the Tests in the Sales and Collection Cycle Accounts Receivable
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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.
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3 Analytical Procedures - Planning
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4 Substantive Analytical - Planning
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5 What is the objective of AU-C section 500? Courtney
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6.04 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. AU-C 500 Audit Evidence
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7 Melanie How does detection risk get reduced ?
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8 Matt F what is the audit risk model ?
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9 Audit Risk Model
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10 Holly pretend GAAS requires AAR ≤.05 Controls are ineffective, we assess RoMM as MAX Which audit approach are we going to take ?
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11 Megan pretend GAAS requires AAR ≤.05 Controls are ineffective, w e assess RoMM as MAX (1.00) We are taking the Primarily Substantive Approach What is the Planned Detection Risk ?
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12 Donne pretend GAAS requires AAR ≤.05 Controls are effective, not great but Somewhat effective and we assess RoMM as 0.25 What is the Planned Detection Risk ?
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13 JP pretend GAAS requires AAR ≤.05 Controls are effective, not great but somewhat effective and we assess RoMM as 0.25 Which audit approach will we take?
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14 Dominic pretend GAAS requires AAR ≤.05 Controls are effective, we assess RoMM as 0.03 Which audit approach will we take ?
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15 Craig pretend GAAS requires AAR ≤.05 Controls are effective, we assess RoMM as 0.03 We will take the Reduced Level of Control Risk Approach What is the Planned Detection Risk ?
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16 Brianna Which assertions relate to Account Balances?
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17 Page 59
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18 Colleen Describe Vouching Describe Tracing
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19 Stephanie If we are auditing assets are we most concerned with overstatementor understatement
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20 Colby If we are auditing LIABILITIES are we most concerned with overstatementor understatement
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21 Eastwood If we are auditing Sales or Revenues are we most concerned with overstatementor understatement
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22 Bill If we are auditing EXPENSES are we most concerned with overstatementor understatement
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23 Katie If we are auditing Accounts Receivable are we most concerned with Existence or Completeness
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24 Kyle C If we are auditing Cash Receipts are we most concerned with Occurrence or Completeness
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25 Kayla If we are auditing CASH DISBURSEMENTS are we most concerned with Occurrence or Completeness
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26 Adam what are the three types of substantive tests?
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27 Analytical Procedures - Substantive
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28 aged trial balance page 285
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30 Kelly with which financial statement assertion might the aged trial balance be helpful ? Figure 3 page 285
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33 Connor 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
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34 Norman what are two forms of receivables confirmations ?
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35 forms of receivables confirmations ? positive p 291 blank form negativep 291
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38 Maintaining control of the confirmation process
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39 alternative procedures --- p. 294 subsequent cash receipts Or Vouch from Acc Rec subsidiary ledger to Invoice to Shipping Doc to Sales Order to Customer Order or Purchase Order
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40 Valuation & allocation Page 298 Valuation & allocation
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41 Valuation & allocation
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42 Cash cut off 12-31-14
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43 Chris M Cash Receipts Journal Are you going to audit the last 25 entries in CR Jnl the prior to 12/31/14 or the first 25 entries in the CR Jnl after 1/1/15
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44 Chris S cash receipts - will you Vouch orTrace ?
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45 Manuel cash receipts other than cutoff with which financial statement assertion are we most concerned if we are auditing cash receipts as of Dec. 31 st ?
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47 Colton cash receipts Vouching the last 25 entries in the cash receipts journal prior to 12/31/14 ? Give an example of evidence that indicates the recorded balance is correct
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48 Calvin cash receipts Vouching the last 25 entries in the cash receipts journal prior to 12/31/14 ? Give an example of evidence that indicates the recorded balance is overstated
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49 Amanda 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 1 st 2015
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50 Eric cash disbursements with which financial statement assertion (other than cutoff) are we concerned if we are auditing cash disbursements ?
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52 Jennifer cash disbursements Vouching the first 25 entries in the cash disbursements journal after 1/1/2015 ? Give an example of evidence that indicates the recorded balance is correct
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53 Brian cash disbursements Vouching the first 25 entries in the cash disbursements journal after 1/1/2015 ? Give an example of evidence that indicates the recorded CASH balance is overstated
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54 Accounts Receivable cut-off 12-31-14
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55 Anna Accounts receivable Are you going to audit the last 25 entries prior to 12/31/14 or the first 25 entries after 1/1/15
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56 Cameron will you Vouch orTrace ?
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57 PJ what does the evidence indicate if we Vouch the last 25 entries in the Accounts Receivable account to shipping documents prior to 12/31/14
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58 Matt N what does the evidence indicate if we Vouch the last 25 entries in the Accounts Receivable balance to shipping documents dated after 1/1/15
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59 shipping documents accounts receivables (& sales) cut-off at the loading dock
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60 shipping documents 20142015 goods shipped in
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61 Melanie do you want to audit the last 25 orders that were actually shipped prior to 12/31/14 or the first 25 orders that were shipped on January 1, 2015
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62 Matt F will you Vouch orTrace ?
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63 Holly what would the evidence indicate if you traced the first 25 shipments of 2015 into the 2015 Accounts Receivable balance
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64 Megan what would the evidence indicate if you traced the first 25 shipments of 2015 into the 2014 Accounts Receivable balance
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65 Donne 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
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66 JP 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
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