Audit Study Guide Essay

582 Words Nov 10th, 2013 3 Pages
ACT 803 FINAL STUDY GUDE

Chapter 19: Audit of the Acquisition and Payment Cycle: * Be able to identify accounts that will likely be affected by weak internal I/C.

ACCOUNTS PAYABLE flows into:
-cash in bank / Raw material purchases
-purchase R&A / PPE
-purchase disc / Prepaid Expenses

….which then flows into Manufacturing/Selling/Admin Expense Control Accounts

CLASSES OF TRANSACTIONS/ACCOUNTS Acquisitions: Cash Disbursements: * Inventory -Cash in bank (from cash disbursements) * Property, plant, and equipment -Accounts Payable * Prepaid expenses -Purchase Discounts * Leasehold improvements * Accounts payable * Manufacturing expenses *
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Phase 3: Design and perform analytical procedures for AP balance/ Design tests of details of AP balances to satisfy balance-related audit objectives.

Design and perform analytical procedures for accounts payable.
Procedure Possible Misstatement
Compared acquisition-related Misstatement of AP and expenses expense account balances w/ prior years

Review list of AP for unusual, non-vendor Classification misstatement for nontrade liabilities. and interest-bearing payables

Compare individual APs with previous years. Unrecorded or nonexistent accounts, or misstatements

Calculate ratios, such as purchases/AP, or “ “
AP/current liabilities

Design and

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