The revenue cycle requires regular review. Identify at least two types of misstatements found in the revenue process.Next, identify a sound, timely internal control to detect and correct this misstatement.
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The revenue cycle requires regular review.
Identify at least two types of misstatements found in the revenue process.
Next, identify a sound, timely internal control to detect and correct this misstatement.
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- The revenue cycle requires regular review. Identify at least two types of misstatements found in the revenue process.Discuss the risk of material misstatement in the revenue and collection cycle, with a specific focus on improper revenue recognition.Identify important internal control activitiespresent in a properly designed system tomitigate the risk of material misstatementsfor each relevant assertion in the revenueand collection cycle.
- Discuss the possibility of substantial misstatement throughout the revenue and collection cycle, with an emphasis on erroneous revenue recognition.Discuss the possibility of substantial misstatement throughout the revenue and collection cycle, with a particular emphasis on erroneous revenue recognition.An assistant on the Carter Company audit has been working in the revenue cycle and has compiled a list of possible errors and fraud that may result in the misstatement of Carter Company’s financial statements and a corresponding list of controls that, if properly designed and implemented, could assist in preventing or detecting the errors and fraud. For each possible error and fraud numbered a through o, select one internal control from the following answer list that, if properly designed and implemented, most likely could assist management in preventing or detecting the errors and fraud. Each response in the list of controls may be selected once, more than once, or not at all. A. Shipping clerks compare goods received from the warehouse with the details on the shipping documents. B. Approved sales orders are required for goods to be released from the warehouse. C. Monthly statements are mailed to all customers with outstanding balances. D. Shipping clerks compare…
- What three types of authorizations are commonly used as internalcontrols for sales? For each authorization, state a substantive test that the auditor coulduse to verify whether the control was effective in preventing misstatements.Which of the following is an incorrect statement? a. The amount of audit work should vary inversely with the likelihood of material misstatements existing in the accounting records. b. The better the organization’s control structure, the less likely it is that material misstatements will be present c. Complex or unusual transactions are more likely to be recorded in error than recurring or routine transactions are d. If misstatements are likely to occur in the recording process, the auditor should develop procedures to detect misstatements.Give examples of tests of controls to test theoperating effectiveness of internal controlsin the revenue and collection cycle
