Audit procedure

Length: 795 words

Define: Amounts and other data relating to recorded transactions and events have been recorded appropriately. Explain: the values and any written information in the income statement are recorded at their correct amounts; no recording errors have occurred. 4. Cut-off Define: Transactions and events have been recorded in the correct accounting period. Explain: the income statement for say the year ended 31 December 2009 only contains sales and purchases for 2009, noting relates to 2008 or 2010. 5. Classification Define: transaction and events have been recorded in the proper accounts.

Explain: all Individual transactions are shown under the correct heading; for example, the amount stated for interest only includes interest paid and interest is not included under any other heading such as light and heat. Transaction 1) Occurrence: all sales must relate to the company making the sale. The sale does not belong to the company. Working back from the recording of the sale. Find the original sales order which authorized the transaction. 2) Completeness: all sales must be recorded. Some sales are not recorded.

Trace individual sales all the way through n accounting system; that Is sales order through to sales total In the financial statements. 3) Accuracy: all sales

Sorry, but full essay samples are available only for registered users

Choose a Membership Plan
must be recorded at the correct amount in the sales day book and the correct receivables ledger/nominal ledger accounts. Errors are made in recording some sales. Trace sales transactions through the system confirming the correct amount has been recorded from the order to the receivables ledger and nominal ledger. 4) Cut-off: sales must be recorded in the same accounting period as goods are dispatched to the customer.

Sales are recorded In the wrong accounting period. Ensure that the sale is recorded in the same accounting period as goods being dispatched( so sales are removed from inventory and included in the Sales Day Book( SAD) In the same month). 5) Classification: Sales must be correctly recorded under “sales” in the financial statements. Sales are recorded under another accounts heading such as purchases. Trace individual sales to the sales account in 2. Purchases 1) Occurrence: all purchases must be necessary for that particular company and actually ordered by the company.

The purchase is not a bona fide company expense. Working back from the recording of the purchase, find the original purchase order which authorized the transaction-ensuring that the purchase is valid for that company. 2) Completeness: all purchases must be recorded. Some purchases are not recorded. Trace individual purchases all the way through an accounting system (recording of order through to financial statements) OR review supplier statements for purchases not recorded (see payable testing in the next chapter for an explanation of this procedure). ) Accuracy: all purchases must be recorded at the erect amount in the purchase day book, and correct payable ledger/nominal ledger accounts. Errors are made in recording some purchases. Trace individual purchases through the system confirming accuracy of recording (order to PDP and the payable and nominal ledgers. ) 4) Cut-off: purchase must be recorded in the same accounting period as goods are received from the supplier. Purchases are recorded in the wrong accounting period. Trace invoices in the PDP Just before and after the year end to Goods Receipt Notes ensuring goods received in the same year as invoice recorded in the PDP.

Where goods received pre-year end and invoice recorded post-year end, ensure purchase accrual is setup. 5) Classification: purchases must be correctly recorded under “purchases” or correct expense account such as light and heat in the financial statements. Purchases are recorded under another accounts heading such as sales. Trace individual purchases to the expense accounts in financial statements. 3. Payroll 1) Occurrence: payrolls are paid for work actually carried out by company employees and hours paid were actually worked.

The payroll does not belong to the company that is a person is paid who is not an employee) or the work was not carried out. Agree list of payroll to list of valid employees in the Human Resources department/ agree hours worked per payroll back to timeshares. 2) Completeness: all payrolls are recorded. Some payrolls are not recorded. Trace individual payrolls all the way through an accounting system from recording of time worked to payrolls expenses accounts in the financial statements. 3) Accuracy: all payrolls are recorded at the correct amount and in the correct nominal ledger accounts.

Errors are made in recording some payrolls. Trace individual payrolls through the system confirming accuracy of recording. 4) Cut-off: payrolls are recorded in the same accounting period that the work was carried out. Payrolls are recorded in the wrong accounting period. Ensure that the payroll is recording in the same accounting period as the work carried out by the employee. 5) Classification: payrolls must be correctly recorded as a payrolls expense in the financial statements. Payrolls are recorded under another accounts heading such as purchases. Trace individual payrolls to payrolls account in the financial statements.

Tagged In :

Get help with your homework


image
Haven't found the Essay You Want? Get your custom essay sample For Only $13.90/page

Sarah from studyhippoHi there, would you like to get such a paper? How about receiving a customized one?

Check it out