16Aud - Controls Specific To Transaction Cycles - Specific Transaction Cycles

Front 1

What is a transaction cycle?

Back 1

A group of homogeneous transactions

Homogeneous means - the same kind

Front 2

A bulk of a company's economic activities can be grouped into a few categories called what?

Back 2

Transaction cycles

Front 3

Within a given category of transactions, what is true about control risk?

Back 3

It is constant

Front 4

What is meant by control risk being constant within a group of homogeneous transactions?

Back 4

That all transactions within that category are Processed subject to the same configuration of internal control policies and procedures.

Front 5

What are the 6 major transaction cycles?

Back 5

A. Revenue/receipts

B.Expenditures/disbursements
C. Payroll

D. Inventory, especially manufactured inventory (since purchased inventory would be similar to expenditures/disbursements as presented here)

E. Fixed assets

F. Investing/financing

Front 6

What is the acronym to use as a tool to analyze the audit considerations of internal control policies and procedures in each transaction cycle?

Back 6

SCARE

Internal controls in each transaction cycle should SCARE!

Front 7

What does the acronym SCARE mean?

Back 7

(1) Segregation of duties,

(2) Comparisons,

(3) Access,

(4) Records, and

(5) Execution of transactions.

Front 8

How does the SAS concerning specific transactions describe control activities?

Back 8

In terms of 4 specific considerations:

(1) authorization;
(2) segregation of duties;
(3) safeguarding assets; and (4) asset accountability.

Front 9

What does segregation of duties mean?

Back 9

Separating "incompatible functions" to the extent possible, subject to cost-benefit considerations.

Front 10

Give an example of a Segregation of Duties.

Back 10

The same employee should not normally:

Authorize (execute),
Have access, and
Perform accounting activities in the ordinary course of duties.

Front 11

What certain Comparisons should be made?

Back 11

1. Comparing actual assets on hand to what the accounting records indicate

2. Comparing related accounting documents on a timely basis for consistency

Front 12

By making certain comparisons, what is established?

Back 12

Proper asset accountability!

Front 13

Give an example of comparing related accounting documents on a timely basis for consistency.

Back 13

Before paying a vendor's invoice, someone should verify that the goods reflected on that invoice agree with what was received per the receiving report, which agrees with the entity's purchase order

Front 14

Access to assets and important accounting documents should be limited to whom?

Back 14

Authorized personnel

Front 15

The Access concept compares to the what two SAS control activities?

Back 15

1. Safeguarding assets
2. Asset accountability

Front 16

Having adequate records and documentation supports what two control activities?

Back 16

1. Recordkeeping
2. Asset accountability

Front 17

In specific transaction cycles, how what is the concept of Excecution?

Back 17

Transactions should be recorded as management authorized

Front 18

Authorization is the same concept as what concept under SCARE?

Back 18

Excecution