TAILIEUCHUNG - Lecture Auditing and assurance services (6/e) - Chapter 8: Acquisition and expenditure cycle

After you have mastered the material in this chapter, you will be able to: Describe the production cycle, including typical source documents and controls; give examples of tests of controls for auditing the controls over conversion of materials and labor in a production process; identify and describe considerations involved in the observation of physical inventory and tests of inventory pricing and compilation;. | Auditing & Assurance Services, 6e Chapter 8 Acquisition and Expenditure Cycle “Show those numbers to the damn auditors and I'll throw you out the $%*@@ window.”----(Buddy Yates, director of WorldCom, Inc. general accounting, to an employee asking for an explanation of a large accounting discrepancy). 8- Learning Objectives Identify significant inherent risks in the acquisition and expenditure cycle. Describe the acquisition and expenditure cycle, including typical source documents and controls. Give examples of tests of controls over purchases of inventory and services. Explain the importance of the completeness assertion for the audit of accounts payable liabilities, and list some procedures for a search for unrecorded liabilities. 8- Learning Objectives (cont.) Discuss audit procedures for other accounts affected by the acquisition and expenditure cycle. Specify some ways fraud can be found in the acquisition and expenditure cycle. Describe some common errors and frauds in the acquisition and expenditure cycle, and design some audit and investigation procedures for detecting them. Describe the payroll cycle, including typical source documents and controls 8- Inherent Risks Unrecorded liabilities Non-cancelable purchase agreements Capitalizing expenses See Exhibit for assertion risks 8- Acquisition and Expenditure Cycle: Typical Activities Purchase Goods and Services Department requesting purchase of item(s) prepares a PURCHASE REQUISITION Bidding may be required on high dollar purchases Purchasing prepares a PURCHASE ORDER approved by the appropriate person (usually dependent on dollar amount of PO) May be done electronically by EDI Receiving the Goods or Services After vendor approval, goods are received by company and evidenced by preparing a RECEIVING REPORT Recording the Asset or Expense and Related Liability Vendor bills company for goods using a VENDOR'S INVOICE Paying the invoice through the cash disbursement process

• Kế toán - Kiểm toán
• Assurance services
• Financial statement audit
• Auditing and assurance services
• Auditing environment
• Production cycle
• Management reports
• Assurance services profession
• Auditing services
• Audit process
• Assurance framework
• Accounting information
• Professional standards
• Auditing standards
• Financial statement auditing
• Auditing business processes
• Auditing internal control
• Internal auditing services
• Contemporary auditing environment
• Attestation engagements
• Account balances
• Structure of the profession
• Audit firms
• Corporate governance
• Professional ethics
• Legal liability
• Liability to clients
• Financial repport audit process
• Financial report assertions
• The business
• Strategic business risk
• Inherent risk assessment
• Inherent risk
• Internal control structure
• Assessing control risk
• Tests of controls
• Sales cycle
• Substantive tests
• Substantive tests of transactions
• Audit sampling
• Sampling theory
• Adjusting events
• Financial report
• Auditor’s reporting obligations
• Professional reporting obligations
• Prospective financial information
• Highlight information
• Institute of internal auditors
• Government accounting
• Reporting duties