Audit of the Sales and Collection Cycle(英文版)(ppt 44页)

1、13 - 1Audit of the Sales andCollection CycleChapter 1313 - 2Revenue and Collection CyclenReceiving and processing orders (granting credit)nDelivering goods and services to customersnBilling and recording of accounts receivablenCollecting and depositing customer paymentsnBank reconciliation13 - 3Acco

2、unts include:nAccounts ReceivablenSalesnCash - cash receiptsnAllowance for Doubtful AccountsnBad DebtsnSales returns and allowancesnSales Discounts13 - 4Accounts in the Salesand Collection CycleSalesCashsalesSales onaccountCash in BankCash DiscountsTakenSales Returnsand AllowancesBad DebtExpenseAcco

3、unts ReceivableBeginningCash receiptsbalanceSales returnsSales onand allowancesaccountCharge-off ofEndinguncollectiblebalanceaccounts13 - 5Accounts in the Salesand Collection CycleAccounts ReceivableBeginningCash receiptsbalanceSales returnsSales onand allowancesaccountCharge-off ofEndinguncollectib

4、lebalanceaccountsBad DebtExpense Allowance for Uncollectible AccountsCharge-off ofBeginninguncollectiblebalanceaccountsEstimate of baddebt expenseEnding balance13 - 6Segregation of DutiesnSales and credit authorizationnCustody of goods and cashnRecord keeping for sales, receivables and inventorynBan

5、k reconciliation13 - 7Control ActivitiesnFidelity bond on persons handling cashnNo sales entered without a customer ordernCredit authorizationnRestricted access to:nInventory/cashnBilling terminalsnBlank invoicesnSales recorded as of shipping datenCash receipts on date received13 - 8Control Activiti

6、esnCustomer invoice checked for:nProper pricenQuantity shipped=billednPending order file reviewed completenessnBank reconciliation monthly nSales returns and adjustments authorization and processingnBad debt write-offs authorization13 - 9Special Audit ConsiderationsnReceivable are required to be con

7、firmed by GAASnAuditor can chose not to confirm receivables if:nReceivables are immaterialnConfirmations are unreliablenConfirmations help prove existence nExistence risk of overstating of revenues13 - 10ConfirmationsnPositive and Blank ConfirmationsnUsed for large individual balancesnBetter evidenc

8、enMust get all responsesnNegative ConfirmationsnUsed for large numbers of small balancesnAnd when IR and CR are lownResponse rates13 - 11Bank ReconciliationnCutoff bank statement confirms reconciling itemsnLapping of customer accounts-nSegregation of dutiesnTrace daily remittance to customer posting

9、 nCheck Kiting controls - interbank transfer schedule13 - 12Processing Customer Orders Customer Order:A request for merchandiseby a customerSales Order: A document describing thegoods ordered by a customer13 - 13Granting Credit Before goods are shipped, a properlyauthorized person must approve credi

10、tto the customer for sales on account.13 - 14Sales TransactionAccountsBusinessFunctionsDocumentsand RecordsSalesAccounts receivableProcessing customer orders,Granting credit, Shipping goods,Billing customers and recording salesSales invoice, Sales journal or listing, Salestransaction file, Accounts

11、receivable masterfile and trial balance, Monthly statements13 - 15Cash Receipts TransactionAccountsBusinessFunctionsDocumentsand RecordsCash in bank (debits from cash receipts)Accounts receivableProcessing and recording cash receiptsRemittance advise, Prelisting of cash receipts,Cash receipts transa

12、ction file,Cash receipts journal or listing13 - 16Sales Returns and Allowances TransactionAccountsBusinessFunctionsDocumentsand RecordsSales returns and allowancesAccounts receivableProcessing and recordingsales returns and allowancesCredit memoSales returns and allowances journal13 - 17Charge-off o

13、f Uncollectible Accounts TransactionAccountsBusinessFunctionsDocumentsand RecordsAccounts receivableAllowance for uncollectible accountsCharging off uncollectibleaccounts receivableUncollectible account authorization formGeneral journal13 - 18Bad Debt ExpenseTransactionAccountsBusinessFunctionsDocum

14、entsand RecordsBad debt expenseAllowance for uncollectible accountsProviding for bad debtsGeneral journal13 - 19Shipping GoodsThis is the first point in the cyclewhere company assets are given up.Shippingdocument13 - 20Billing Customersand Recording SalesSales invoiceSales transaction fileSales jour

15、nal or listingAccounts receivable master fileAccounts receivable trial balanceMonthly statement13 - 21Processing and RecordingCash ReceiptsRemittance advisePrelisting of cash receiptsCash receipts transaction fileCash receipts journal or listing13 - 22Lockbox Systems and Electronic Funds TransferCus

16、tomerBankOrder/PaymentInformationCompany13 - 23Processing and Recording Sales Returns and AllowancesCredit memoSales returns andallowances journal13 - 24Charging Off UncollectibleAccounts ReceivableUncollectible AccountAuthorization FormThis is a document used internally toindicate authority to writ

17、e an accountreceivable off as uncollectible.13 - 25Providing for Bad DebtsThis provision represents a residual,resulting from managementsend-of-period adjustment of theallowance for uncollectible accounts.13 - 26Effect of E-Commerce on the Sales and Collection CycleThe InternetThe Internet andother

18、developingtechnologies allowcompanies to developnew business models.13 - 27Effect of E-Commerce on the Sales and Collection CycleBusiness-to-business (B2B)Business-to-consumer (B2C)Managements assertions for sales andcollection activities remain the same.13 - 28Effect of E-Commerce on the Sales and

19、Collection CycleAuditors should obtain an understandingof the design and operation of key internalcontrols over e-commerce revenues.Evidence for e-commerce activitiesis likely to be in electronic form.13 - 29Methodology for Designing Controlsand Substantive Tests: SalesUnderstand internalcontrol sal

20、esAssess plannedcontrol risk salesEvaluate cost-benefitof testing controls.Design tests of controlsand substantive testsof transactions for salesto meet transaction-related audit objectives.Audit proceduresSample sizeItems to selectTiming13 - 30Understanding InternalControl SalesStudy the clients fl

21、owcharts,prepare an internal controlquestionnaire, and performwalk-through tests of sales.13 - 31Assess PlannedControl Risk SalesAdequate separationof dutiesProper authorizationAdequate documentsand recordsPrenumbereddocuments Monthly statements Internal verification procedures13 - 32Internal Verifi

22、cation ProceduresEvaluate cost-benefitof testing controls.Design tests ofcontrols for sales.13 - 33Transaction-Related AuditObjectives for SalesExistence:Recorded sales are for shipments actually made.Accuracy:Recorded sales are for the amount shipped.Completeness:Existing sales transactions are rec

23、orded.13 - 34Design Substantive Testsof Transactions for SalesClassification:Sales transactions are properly classified.Timing:Sales are recorded on the correct dates.Posting and summarization:Sales transactions are properly includedin the accounts receivable master file.13 - 35Direction of Tests fo

24、r SalesCustomerorderShippingdocumentDuplicatesales invoiceSalesjournalGeneralledgerAccountsreceivablemaster file=Completeness StartExistence Start13 - 36Summary of Methodologyfor SalesColumn 1: Transaction-related audit objectivesColumn 2: Key internal controlsColumn 3: Test of controlsColumn 4: Wea

25、knessesColumn 5: Substantive tests of transactions13 - 37Sales Returnsand AllowancesThe transaction-related audit objectivesand clients methods of controllingmisstatements are essentially the samefor processing credit memos as thosedescribed for sales.13 - 38Sales Returnsand AllowancesThere are, how

26、ever, two important differences.MaterialityEmphasis onobjectives13 - 39Tests of Controls and Substantive Testsof Transactions for Cash Receiptsv Determine whether cash received was recordedv Prepare proof of cash receiptsv Test to discover lapping of accounts receivable13 - 40Audit Tests forUncollectible AccountsExistence of recorded write-offs is the mostimport