Deck 11: Auditing Revenue, Related Accounts, Audit of Acquisition and Payment Cycle and Inventory

Question 1

The auditor is required by the accounting standards to observe the taking of physical inventory.

Answer 1

True

Question 2

When a cheque has been made for payment to a vendor, the underlying documentation and the cheque should be sent to which of the following for signature and cancellation?

A) manager
B) receptionist
C) accountant
D) accounts payable supervisor

Answer 2

accountant

Question 3

Unusual transactions, either because of their size, complexity or special terms, should require a high level management review.

Answer 3

True

Question 4

All companies attempting to comply with accounting standards should refer to the Australian Securities and Investments Commission for guidance.

Question 5

A red flag that may alert the auditor to fraud in the revenue cycle is a trend of revenue growth that is consistent with industry results.

Question 6

Accounts receivable Controls
In the financial report, there are many risks associated with an audit that must be considered. Identify and discuss five potential fraud risk factors in the revenue cycle.