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Audit Program Design Essay

923 words - 4 pages

Audit Program Design Part III
Sheila Dunn
ACC 546
May 13, 2013
Cecil Lucy

Audit Program Design Part III
Inventory and Warehouse Cycle
The inventory and warehouse cycle can be divided into five sections: acquire and record raw materials, labor, and overhead, internally transfer assets and costs, ship goods and record revenue and costs, physically observe inventory, and price and compile inventory. The following will be the tests of control, substantive tests of transactions, and analytical procedures.
1. Acquire and record raw materials, labor, and overhead
a. Tests of control
i. Check to make sure that all materials ordered have been accounted for
ii. Check to make ...view middle of the document...

Tests of controls
i. Obtain shipping records
ii. Obtain revenue records for shipping
iii. Obtain records for costs associated with the shipping process
b. Substantive tests of transactions
i. Sample the shipping records to ensure correct recording
ii. Sample the revenue records to ensure correct recording
iii. Sample the cost records to ensure correct recording
c. Analytical procedures
i. Compare results to prior years to ensure that the data matches up
ii. Determine if there are any risks
4. Physically observe inventory
a. Tests of control
i. Obtain the inventory lists
ii. Obtain what inventory has been used
b. Substantive tests if transactions
i. Sample the inventory list to ensure that the inventory is present
ii. Make sure that the inventory used is listed
c. Analytical procedures
i. Compare results to prior years to ensure that the data matches up
ii. Determine if there are any risks
5. Price and compile inventory
a. Tests of controls
i. Obtain pricing list
ii. Obtain inventory list
b. Substantive tests of transactions
i. Make sure that the pricing list is what is being used for the actual prices
ii. Make sure that the inventory list has correct price listed
iii. Make sure that inventory is counted correctly
c. Analytical procedures
i. Compare results to prior years to ensure that the data matches up
ii. Determine if there are any risks
Cash Cycle
This cycle will deal with the accounts that have cash holdings or where they pay their bills from. This cycle is included in all of the cycles except inventory and warehouse cycle. This will be the overview on how the audit of this cycle will be laid out.
1. General cash accounts
a. Tests of controls
i. Obtain balance sheets
ii. Gain access to...

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