Você está na página 1de 31

Audit of the Sales and Collection

Cycle: Tests of Controls and


Substantive Tests of Transactions

Accounts in the Sales and Collection Cycle

Sales Transaction
Accounts

Sales
Accounts
receivable

Business Functions Documents and Records

Processing
customer orders
Granting credit
Shipping goods
Billing customers
and recording
sales

Customer order
Sales order
Customer order or
sales order
Shipping document
Sales invoice
Sales transaction file
Sales journal or listing
Accounts receivable
master file
Accounts receivable
trial balance
Monthly statements

Cash Receipts Transaction


Accounts

Cash in bank
(debits from
cash receipts)
Accounts
receivable

Business Functions Documents and Records

Processing and
recording cash
receipts

Remittance advice
Prelisting of cash
receipts
Cash receipts
transaction file
Cash receipts journal
or listing

Sales Returns and Allowances Transaction


Accounts

Sales returns
and
allowances
Accounts
receivable

Business Functions Documents and Records

Processing and
recording sales
returns and
allowances

Credit memo
Sales and returns and
allowances journal

Write-off of Uncollectible Accounts


Transaction
Accounts

Accounts
receivable
Allowance for
uncollectible
accounts

Business Functions Documents and Records

Writing off
uncollectible
accounts
receivable

Uncollectible account
authorization form
General journal

Bad Debt Expense Transaction


Accounts

Bad debt
expense
Allowance for
uncollectible
accounts

Business Functions Documents and Records

Providing for bad


debts

General journal

Processing Customer Orders


Customer Order:
A request for merchandise by a customer
Sales Order:
A document describing the goods ordered
by a customer

Granting Credit
Before goods are shipped, a properly
authorized person must approve credit
to the customer for sales on account

Shipping Goods
This is the first point in the cycle
at which the company gives up assets.
One type of shipping document is a
bill of lading.
Bills of lading are often transmitted once
goods have been shipping

Billing Customers and Recording Sales

Sales
transaction
file

Accounts
receivable
file

Accounts
receivable
trial balance

Sales
journal

Processing and Recording Cash Receipts


Prelisting
of
Cash
receipts
Remittance advice

Cash receipts
transaction
file
Cash receipts listing

Processing and Recording Sales Returns and


Allowances
Credit memo

Sales returns and allowances journal

Writing Off Uncollectible


Accounts Receivable
Uncollectible account authorization form

This is a document used internally to


indicate authority to write an account
receivable off as uncollectible

Providing for Bad Debts


This provision represents a residual,
resulting from managements
end-of-period adjustment of the
allowance for uncollectible accounts

Methodology for Designing Controls


and Substantive Tests
Understand internal control sales
Assess planned control risk sales
Determine extent of testing controls
Audit procedures
Design tests of controls and
Sample size
substantive tests of transactions
for sales to meet transactionItems to select
related audit objectives
Timing

Understand Internal Control Sales


Study the clients flowcharts, prepare
an internal control questionnaire, and
perform walk-through tests of sales.

Assess Planned Control Risk Sales

1. Framework for assessing control risk


2. Identify key internal controls and deficiencies
3. Associate controls and deficiencies with the
objectives
4. Assess control risk for each objective

Assess Planned Control Risk Sales


Adequate separation of duties
Proper authorization
Adequate documents and records
Pre-numbered documents

Monthly statements
Internal verification procedures

Determine Extent of Testing Controls

Control
effectiveness
Control
risk

Direction of Tests for Sales

Transaction-related Audit
Objectives for Sales
Occurrence:
Recorded sales are for shipments actually made.
Completeness:
Existing sales transactions are recorded.
Accuracy:
Recorded sales are for the
amount shipped.

Transaction-related Audit
Objectives for Sales
Posting and summarization:
Sales transactions are correctly included
in the accounts receivable master file.
Classification:
Sales transactions are correctly classified.
Timing:
Sales are recorded on the
correct dates.

COSO Report Identifies Revenue


Misstatement Techniques
Sham sales

Improper
% of completion

Improper
sales cutoff

Fraudulent
Techniques

Premature
revenue
recognition

Unauthorized
shipments

Bill and hold

Conditional sales
Round-tripping
loans as sales

Consignment
sales

Summary of Methodology
for Sales
Identify key transaction-related audit objectives
Determine key existing controls
Design tests of controls to verify effectiveness
Evaluate any control deficiencies
Determine extent of substantive tests
of transactions

Sales Returns and Allowances


The transaction-related audit objectives and
clients methods of controlling misstatements
are essentially the same for processing credit
memos as those described for sales.

Sales Returns and Allowances


There are, however, two important differences:

Materiality

Emphasis
on
objectives

Tests of Controls and Substantive Tests


of Transactions for Cash Receipts
Determine whether cash received was recorded
Prepare proof of cash receipts*
Test to discover lapping of accounts receivable*

* Only performed when fraud is suspected

Audit Tests for the Write-Off


of Uncollectible Accounts
Occurrence transaction-related audit objective
Proper authorization of the write-off of
uncollectible accounts
Verification of accounts written off

Effect of Results of Controls and


Substantive Tests of Transactions
The parts of the audit most affected by the
tests for the sales and collection cycle are:

Allowance for
doubtful accounts

Accounts
receivable

Bad debt expense


Cash

Types of Audit Tests for the Sales and


Collection Cycle
Sales

Accounts
Cash in
Receivable
Bank
Sales
Cash receipts
transactions
transactions
Audited by
TOC, STOT, and AP

Ending
balance

Audited by
TOC, STOT, and AP

Ending
balance

Audited by AP and TDB

TOC + STOT + AP + TDB


= Sufficient appropriate evidence