2. 1 Chapter 16 Completing the Tests in the Sales and Collection Cycle Accounts Receivable

3. 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.

4. 3 Analytical Procedures - Planning

5. 4 Substantive Analytical - Planning

6. 5 What is the objective of AU-C section 500? Courtney

7. 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

8. 7 Melanie How does detection risk get reduced ?

9. 8 Matt F what is the audit risk model ?

10. 9 Audit Risk Model

11. 10 Holly pretend GAAS requires AAR ≤.05 Controls are ineffective, we assess RoMM as MAX Which audit approach are we going to take ?

12. 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 ?

13. 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 ?

14. 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?

15. 14 Dominic pretend GAAS requires AAR ≤.05 Controls are effective, we assess RoMM as 0.03 Which audit approach will we take ?

16. 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 ?

17. 16 Brianna Which assertions relate to Account Balances?

18. 17 Page 59

19. 18 Colleen Describe Vouching Describe Tracing

20. 19 Stephanie If we are auditing assets are we most concerned with overstatementor understatement

21. 20 Colby If we are auditing LIABILITIES are we most concerned with overstatementor understatement

22. 21 Eastwood If we are auditing Sales or Revenues are we most concerned with overstatementor understatement

23. 22 Bill If we are auditing EXPENSES are we most concerned with overstatementor understatement

24. 23 Katie If we are auditing Accounts Receivable are we most concerned with Existence or Completeness

25. 24 Kyle C If we are auditing Cash Receipts are we most concerned with Occurrence or Completeness

26. 25 Kayla If we are auditing CASH DISBURSEMENTS are we most concerned with Occurrence or Completeness

27. 26 Adam what are the three types of substantive tests?

28. 27 Analytical Procedures - Substantive

29. 28 aged trial balance page 285

30. 29

31. 30 Kelly with which financial statement assertion might the aged trial balance be helpful ? Figure 3 page 285

32. 31

33. 32

34. 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

35. 34 Norman what are two forms of receivables confirmations ?

36. 35 forms of receivables confirmations ? positive p 291 blank form negativep 291

37. 36

38. 37

39. 38 Maintaining control of the confirmation process

40. 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

41. 40 Valuation & allocation Page 298 Valuation & allocation

42. 41 Valuation & allocation

43. 42 Cash cut off 12-31-14

44. 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

45. 44 Chris S cash receipts - will you Vouch orTrace ?

46. 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 ?

47. 46

48. 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

49. 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

50. 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

51. 50 Eric cash disbursements with which financial statement assertion (other than cutoff) are we concerned if we are auditing cash disbursements ?

52. 51

53. 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

54. 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

55. 54 Accounts Receivable cut-off 12-31-14

56. 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

57. 56 Cameron will you Vouch orTrace ?

58. 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

59. 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

60. 59 shipping documents accounts receivables (& sales) cut-off at the loading dock

61. 60 shipping documents 20142015 goods shipped in

62. 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

63. 62 Matt F will you Vouch orTrace ?

64. 63 Holly what would the evidence indicate if you traced the first 25 shipments of 2015 into the 2015 Accounts Receivable balance

65. 64 Megan what would the evidence indicate if you traced the first 25 shipments of 2015 into the 2014 Accounts Receivable balance

66. 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

67. 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

68. 67

69. 68

70. 69

71. 70

72. 71