Audit Tests

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GOOD MORNING/AFTERNOON
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AUDIT TEST DECISIONS

• Audit Procedures
• Sample Size
• Items to Select from the Population
• Appropriate Time to Perform the Procedures

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OVERVIEW OF AUDIT APPROACH
Financial Statements
Audit Cycles
Accounts/Transactions
Management Assertions
Audit Objectives
Audit Tests
Audit Program
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AUDIT CYCLES

• Sales and Collection (Revenue)
• Acquisition and Payment (Expenditure)
• Payroll and Personnel (Expenditure)
• Inventory and Warehousing (Conversion)
• Capital Acquisition and Repayment (Treasury)
• Financial Reporting

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ACQUISITION AND PAYMENT CYCLE
Beginning Accounts Payable

Acquisition Of Goods And Services
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Cash Disbursements

Ending Accounts Payable
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ACCOUNTING INFORMATION SYSTEM
Customer Order Sales Invoice Shipping Documents
Sales Journal
Customer Check Remittance Advice Deposit Slip
Statement of Financial Position
Cash Receipts Journal
Purchase Requisition Purchase Order Receiving
Report Vendor Invoice Voucher Cover
Purchase Journal/ Voucher Register
General Ledger/ Subsidiary Ledgers
Statement of Income
Check Remittance Advice
Cash Disbursements Journal
Statement of Cash Flows
Time Cards Job Tickets Authorization
Forms Payroll Checks
Payroll Journal
General Journal
Debit/Credit Memos Other Support
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TYPES OF AUDIT PROCEDURES

• Procedures to Obtain an Understanding (Not Audit
  Test)
• Tests of Controls
• Substantive Tests of Transactions
• Tests of Details of Balances
• Analytical Procedures

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SALES AND COLLECTION CYCLE
Beginning Accounts Receivable

Sales
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Cash Receipts

Ending Accounts Receivable
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CAPITAL ACQUISITION AND REPAYMENT CYCLE
Beginning Common Stock

Issuance Of Common Stock
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Retirement Of Common Stock

Ending Common Stock
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TYPES OF AUDIT TECHNIQUES (EVIDENCE)

• Physical Examination
• Confirmation
• Documentation (Internal/external)
• Reperformance
• Observation
• Inquiries
• Analytical Procedures

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FACTORS AFFECTING COMPETENCE OF EVIDENCE

• Independence of Provider
• Effectiveness of Internal Control
• Auditor's Direct Knowledge
• Qualifications of Provider
• Objectivity

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MANAGEMENT ASSERTIONS

• Existence
• Timing/Cutoff
• Completeness
• Timing/Cutoff
• Valuation Or Allocation
• Detail Tie-in
• Posting and Summarization
• Accuracy
• Realizable Value
• Rights and Obligations
• Presentation and Disclosure
• Classification
• Disclosure