Chapter 10: Auditing the Revenue Process

control risk assessment steps

1. understand and document the revenue process based on reliance strategy

2. plan and perform tests of controls on revenue transactions

3. set and document the control risk for the revenye process

what are substantive analytical procedures?

examine plausible relationship amoung revenue related accounts

how do you test existance

confirmation

what is confirmation

direct written response from third parties about a/r

what is existence of AR

no fake accounts and amounts

what is completeneess of AR balance

whether all acounts are included in ledger

what is cutoff of AR balance

recorded in proper period

what is a positive confirmation

response on whether they agree or disagree

what is negatibe confirmation

customer only responde when they disagree

when are negative confirmation used

small account balances and low CR

alternative procedures if responce is not given