Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
10 Cards in this Set
- Front
- Back
What must auditors satisfy in designing tests of details of balances for accounts receivable?
What are they called when applied to accounts receivable? |
Each of the eight balance-related audit objectives which are the same for all accounts. Specifically applied to accounts receivable they are called accounts receivable balance-related audit objectives.
|
|
What are the 8 accounts receivable balance-related audit objectives?
|
1. A/R in aged trial balance agree with related master file amounts, and the total is correctly added and agrees with the general ledger. (DETAIL TIE-IN)
2. Recorded A/R Exist. (EXISTENCE) 3. Existing A/R are included. (COMPLETENESS) 4. A/R are accurate. (ACCURACY) 5. A/R are correctly classified. (CLASSIFICATION) 6. Cutoff for A/R is correct. (CUTOFF) 7. A/R is stated at realizable value. (REALIZABLE VALUE) 8. The client has rights to A/R. (RIGHTS) |
|
What is the term for allocating the preliminary judgment amount to each significant balance sheet account, including A/R?
|
Setting tolerable misstatement.
|
|
Auditors assess inherent risk for ?
|
Each objective for an account such as accounts receivable, considering client business risk and the nature of the client and industry.
|
|
SAS 99 Indicates ?
|
Auditors must normally identify a specific fraud risk for revenue recognition.
|
|
SAS 99 likely affects the auditor's assessment of inherent risk for what objectives?
|
Existence, Sales cutoff, and Sales returns and allowances cutoff.
|
|
What is a common way for clients to misstate cutoff?
|
Error or through fraud.
|
|
Why is it common for clients to unintentionally or fraudulently misstate the allowance for uncollectible acccounts (realizable value)?
|
Because of the difficulty of the judgements to determine the correct balance.
|
|
Auditors are especially concerned with what three aspects of internal controls?
|
1. Controls that prevent or detect embezzlements.
2. Controls over cutoff. 3. controls related to the allowance for uncollectible accounts. |
|
What does an aged trial balance do?
|
It lists the balances in the accounts receivable master file at the balance sheet date, including individual customer balances outstanding and a breakdown or each balance by the time passed between the date of sale and the balance sheet date.
|