...and collection cycle, the payroll and personnel cycle, and the acquisition and payment cycle of Apollo Shoe Company. The tests are consistent with generally accepted auditing methods in The United States of America. The tests will be designed to prove existence, completeness, and accuracy. Please take the time to look over the proposed tests and techniques and feel free to ask any questions regarding the tests that will be performed. Sales and Collection Cycle To test for existence, AOW will verify whether sales invoices are attached to the bill of lading or not and check to see if there are any invoices with unusual transactions or amounts. Next, we will check completeness by verifying the sequence of sales documents and trace the selected sales documents through the sales and collection process. We will also verify the prices of selected sale items and recompute the sales invoices that are billed to the customer for accuracy. The next step is to verify the classifications of sales transactions by examining the document package for internal verification and examining sales invoices for proper account classifications. The final audit objective test will consider timing. We will verify that sales are recorded on the correct dates. We will also verify the shipping documents with sales transactions and customer invoices for accurate dates and correct sequences. Payroll and Personnel Cycle The object of these checks are to prove that recorded payroll payments are for work...
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...Audit Ends: March 31, 2010 (Tentative) AUDIT SCOPE: Sales/revenue and collection cycle Payroll and personnel cycle Acquisition and payment cycle All Transactions, orders, and payments processed January 1, 2007 through December 31, 2007 AUDIT OBJECTIVES: • To determine internal control compliance to sub objectives for payroll and personnel cycle, sales/revenue and collection cycle, and the acquisition and payment cycle. • To obtain control evidence and documentation about the existence, accuracy, classification, timing and completeness of recorded acquisition transactions. CRITERIA: Statement on Auditing Standards (SAS) No. 99 – Fraud Auditing Standards AUDITOR ASSIGNMENTS: John Butler – Sales and Collection David Sargent – Payroll and Personnel Perry Boydstun – Acquisition and Payment Cycle METHODOLOGY: Each auditor will perform their assigned area of tests of controls and substantive test using sampling techniques as appropriate. Strengths and weaknesses’ should be denoted by using a “S” or “W” on each area applicable area of the flowchart and checklist of each assigned area. The summary status (“Ss” and “Ws”) will be listed in the bridge worksheet for SOX 404 Audit analysis. Bridge Worksheet for Sales and Collection Cycle – SOX 404 Audit Public companies typically rely heavily on proper internal controls to maintain an effective sales and collection cycle. As such, AOW will need to expand the substantive tests of transactions to include...
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...Ends: March 31, 2010 (Tentative) AUDIT SCOPE: Sales/revenue and collection cycle Payroll and personnel cycle Acquisition and payment cycle All Transactions, orders, and payments processed January 1, 2007 through December 31, 2007 AUDIT OBJECTIVES: • To determine internal control compliance to sub objectives for payroll and personnel cycle, sales/revenue and collection cycle, and the acquisition and payment cycle. • To obtain control evidence and documentation about the existence, accuracy, classification, timing and completeness of recorded acquisition transactions. CRITERIA: Statement on Auditing Standards (SAS) No. 99 – Fraud Auditing Standards AUDITOR ASSIGNMENTS: John Butler – Sales and Collection David Sargent – Payroll and Personnel Perry Boydstun – Acquisition and Payment Cycle METHODOLOGY: Each auditor will perform their assigned area of tests of controls and substantive test using sampling techniques as appropriate. Strengths and weaknesses’ should be denoted by using a “S” or “W” on each area applicable area of the flowchart and checklist of each assigned area. The summary status (“Ss” and “Ws”) will be listed in the bridge worksheet for SOX 404 Audit analysis. Bridge Worksheet for Sales and Collection Cycle – SOX 404 Audit Public companies typically rely heavily on proper internal controls to maintain an effective sales and collection cycle. As such, AOW will need to expand the substantive tests of transactions to include...
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...Audit Ends: March 31, 2010 (Tentative) AUDIT SCOPE: Sales/revenue and collection cycle Payroll and personnel cycle Acquisition and payment cycle All Transactions, orders, and payments processed January 1, 2007 through December 31, 2007 AUDIT OBJECTIVES: • To determine internal control compliance to sub objectives for payroll and personnel cycle, sales/revenue and collection cycle, and the acquisition and payment cycle. • To obtain control evidence and documentation about the existence, accuracy, classification, timing and completeness of recorded acquisition transactions. CRITERIA: Statement on Auditing Standards (SAS) No. 99 – Fraud Auditing Standards AUDITOR ASSIGNMENTS: John Butler – Sales and Collection David Sargent – Payroll and Personnel Perry Boydstun – Acquisition and Payment Cycle METHODOLOGY: Each auditor will perform their assigned area of tests of controls and substantive test using sampling techniques as appropriate. Strengths and weaknesses’ should be denoted by using a “S” or “W” on each area applicable area of the flowchart and checklist of each assigned area. The summary status (“Ss” and “Ws”) will be listed in the bridge worksheet for SOX 404 Audit analysis. Bridge Worksheet for Sales and Collection Cycle – SOX 404 Audit Public companies typically rely heavily on proper internal controls to maintain an effective sales and collection cycle. As such, AOW will need to expand the substantive tests of transactions to include...
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...Slide 1 The objective in the audit of the acquisition and payment cycle is to evaluate whether the accounts affected by the acquisitions of goods and services and the cash disbursements for those acquisitions are fairly presented in accordance with accounting standards. There are three classes of transactions included in the cycle: 1. Acquisitions of goods and services 2. Cash disbursements 3. Purchase returns and allowances and purchase discounts Slide 2 And all three transactions are either debited or credited to accounts payable. Ten typical accounts involved in the acquisition and payment cycle are shown by T accounts. Slide 3 For simplicity, we show only the control accounts for the three major categories of expenses used by most companies. For each control account, examples of the subsidiary expense accounts are also given. Slide 4 There are four business functions that occur in every business and the first three functions are for recording the acquisition of goods and services on account, and the fourth function is for recording cash disbursements. Processing purchase orders includes documents of purchase requisition which is used to request goods and services by an authorized employee. Such as, materials by production staff or the storeroom supervisor. And second document is purchase order. Receiving goods and services include documents of receiving report which is a paper or electronic document prepared at the time goods are received. Recognizing...
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...ACT 803 FINAL STUDY GUDE Chapter 19: Audit of the Acquisition and Payment Cycle: * Be able to identify accounts that will likely be affected by weak internal I/C. ACCOUNTS PAYABLE flows into: -cash in bank / Raw material purchases -purchase R&A / PPE -purchase disc / Prepaid Expenses ….which then flows into Manufacturing/Selling/Admin Expense Control Accounts CLASSES OF TRANSACTIONS/ACCOUNTS Acquisitions: Cash Disbursements: * Inventory -Cash in bank (from cash disbursements) * Property, plant, and equipment -Accounts Payable * Prepaid expenses -Purchase Discounts * Leasehold improvements * Accounts payable * Manufacturing expenses * Selling and administrative expenses Processing Purchase Orders: -Purchase requisition -Purchase order Receiving Goods and Services -Receiving Report Recognizing Liability: -Vendor’s invoice -Debit memo -Voucher -Acquisitions transaction file -Acquisitions Journal/lisintg -AP master file -AP trial balance -Vendor’s statement Processing and recording Cash Disbursements: -Check -Cash disb. Transaction file -Cash disb. Journal/lisiting * For both the acquisition/expenditure and cash disbursement cycles, just refresh your understanding of the flow charts and be able to do the following: * Identify internal controls * Identify the objective/purpose of the I/C * Describe how the I/C is supposed to work * Describe how to perform...
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...Apollo Shoes, Inc. requires a design of steps to develop audit objectives to plan the audit. The financial statements are divided into cycles to better manage the audit and disperse to staff within the firm. The following cycle’s sales and collection, payroll and personnel and acquisition and payment were developed to design test of controls, substantive tests of transactions and analytical procedures. Anderson, Olds, and Watershed, LLP will be designing test of controls, substantive tests of transactions and analytical procedures for Apollo. This will allow our firm to better understand the internal controls within their company along with making sure the company is in compliance with the requirements of the Sarbanes-Oxley Act of 2002 and generally accepted accounting principles. Sales & Collection cycle Sales and collections audits test financial information relating to the sales of goods and services to consumers and the payment collection for these sales. In Apollo shoes audit AOW will involve the decisions and processes necessary for the transfer of the ownership of goods and services to customers after they are made available for sale; it begins with a request by a customer and ends with the conversion of material on service into an account receivable and ultimately into cash. There are several functions include in this cycle such as processing customer orders, granting credit , shipping goods, billing customer , recording sales , processing cash receipts...
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...Shoes, Inc. Langley, ME Dr Mr. Elliot, We have developed test o controls of substantive test of transactions, and analytical procedures for the audit of Apollo Shoes Inc.’s sales and collection cycle, payroll and personnel cycle, acquisition and payment cycle, and Inventory and Warehousing cycle in line with the generally accepted auditing principles. The objective is to verify existence, accuracy and completeness. A substantive test should be associated with each of the transactions related to the audit objectives. The objectives of the audit include the occurrence, accuracy, completeness, posting, classification, summarization, and timing. Analytical Procedures must be performed in the planning stage of the audit and reviewed near the end of the audit. This serves to provide additional assurance to the auditor that the account has also been presented fairly in line with the generally accepted accounting principles. Based on previous research, it is our opinion that the sales and collection cycle controls are significantly ineffective. Several of the results indicate that the sales transactions are improperly recorded due to absent bill of ladings and a lack of correct approvals resulting in issues with Apollo Shoes Inc. collection activities as well as erroneous customer billing as a result of over and undercharges. To prevent similar...
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...audit process for Apollo Shoes is to design tests of controls, substantive tests of transactions, and analytical procedures for the sales, collection, payroll, personnel, acquisition, and payment cycles. These test and procedures are with intent to attest operating effectiveness of internal controls of Apollo Shoes on the basis of documentation provided. It is with the understanding that with the performing of test and procedures an opinion can be formed but management of Apollo shoes is responsible for the maintenance and assessment internal controls of over financial reporting. The design of test of controls of the sales and collection cycle follows. Sales and Collection Cycle Tests of Controls Sales Cycle: The review of the revenue and collection cycle manual of Apollo Shoes provides the improper record keeping of sales orders and that sales orders are not numbered which may affect the accuracy of pricing on invoices so steps. The test of controls for sale cycle to determine accuracy will be: 1. Examine sample 1004345 for Anglonesia Rehabilitation and Reprogramming Institute invoice to review unit prices of merchandise listed. 2. Compare unit prices on invoice for merchandise to these shoe types from inventory status report of 2007. 3. Verify unit prices on invoices are correct. Collection Cycle: A review of balance confirmation from customers provides a customer of Apollo Shoes Neutralizer’s account balance was understated by $ 1,388.75, which prompts testing of...
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...instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. If you purchased this work within the United States or Canada you should be aware that it has been imported without the approval of the Publisher or the Author. Editorial Director: Natalie Anderson Acquisitions Editor: Julie Broich Editorial Project Manager: Karen Kirincich Production Project Manager: Judy Leale Operations Specialist: Ben Smith Copyright © 2010, 2008, 2006, 2005, 2003 Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval...
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...Cash Receipts Cycle Upon the due date, the company collects payment from its clients usually they pick-up the payment every Friday. However, there are instances of special arrangements for collection for specified day of the week. The collector or messenger collects the payment from its clients and issues a duplicated copy of official receipts. The original is given to the clients as its copy. Before the end of the same banking day, the collector/messenger goes to their depository bank, prepares a deposit slip and deposits their collection. The authorized duplicate copy of the deposit slip is then attached to the copy of the duplicate official receipt and turned over to the accounting department. The accounts receivable clerk will reconcile the payment transaction. She checks if the validated duplicate copy of the deposit slips corresponds to the duplicate official receipt. If it matched, this will trigger the posting of payment of the client in the official receipts and updates the invoicing book and accounts receivable ledger. At the end of each week, the collector and the accounting staff prepares a weekly collection report and summary of accounts receivable aging report respectively that will be given to the accounting manager. The aging reports are for internal purposes and to see how many collection the company made. At the end of each month, the accounting manager does bank reconciliation to update the company’s book. She reconciles the passbook with the cash in bank...
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...prenumbered document to establish a formal means of recording and controlling acquisitions prepared by a payables clerk for each payment. A vendor’s invoice, receiving report, and purchase order attached to it. ____________________________3. A prenumbered document that originates in the inventory stockroom or an operating department and indicates to the purchasing department that goods should be ordered. ____________________________4. A document that indicates the description and quantity of goods and services received, price, including freight, cash discount terms, and date of billing. ____________________________ 5. A prenumbered document recording the description, quantity, and related information for goods and services the company intends to purchase. This document is frequently used to indicate authorization to procure goods and services. Part II Instruction: Write PABEBE if the misstatement in the Expenditure Cycle: Acquisition, PABIBI if the misstatement in the Expenditure Cycle: Cash Disbursement and PABEBI if it is Both ____________1. Error in recording purchase transaction. ____________2. Duplicate recording of purchases. ____________3. Unrecorded disbursements. ____________4. Inaccurate recording of a purchase or disbursement. ____________5. Late recording of cost of purchases. Part III (Identification) ____________________________1. Recorded acquisitions are the entity’s purchases and liabilities....
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...| Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Turnover Ratios | | | | | | Inventory turnover | 8.35 | 8.68 | 8.07 | 4.03 | 11.02 | Receivables turnover | 4.77 | 4.95 | 4.64 | 3.41 | 5.39 | Payables turnover | 13.83 | 17.58 | 16.84 | 11.44 | 27.58 | Working capital turnover | 3.89 | 3.84 | 3.57 | 2.21 | 4.17 | Average No. of Days | | | | | | Average inventory processing period | 44 | 42 | 45 | 91 | 33 | Add: Average receivable collection period | 77 | 74 | 79 | 107 | 68 | Operating cycle | 120 | 116 | 124 | 197 | 101 | Less: Average payables payment period | 26 | 21 | 22 | 32 | 13 | Cash conversion cycle | 94 | 95 | 102 | 166 | 88 | Pfizer Inc., short-term (operating) activity ratios Ratio | Description | The company | Inventory turnover | An activity ratio calculated as revenue divided by inventory. | Pfizer Inc.'s inventory turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level. | Receivables turnover | An activity ratio equal to revenue divided by receivables. | Pfizer Inc.'s receivables turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level. | Payables turnover | An activity ratio calculated as revenue divided by payables. | Pfizer Inc.'s payables turnover increased from 2010 to 2011 but then declined significantly from 2011 to 2012. | Working capital turnover | An activity ratio calculated...
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...EXECUTIVE SUMMARY ONGC leads the way when it comes to achieving carbon neutrality within the energy sector. In an effort to do so, it has become the first PSU to achieve emission reduction certificates from the United Nations. Achievements of this sort, coupled with growth, make ONGC the undisputed leader in its business The Company has set many milestones and the government has decided to bestow the “Maharatna” status with increased empowerments and distinctly higher status as a premier Public Sector Undertaking. The company has recorded the highest Net Profit of Rs. 189,240 million. ONGC recorded highest ever production of 62.05 million ton of oil and equivalent gas (MMTOE). For the reporting year 2010-11. This represents a growth of 12% in both turnover and net worth and 13% in net profit over FY-2010. The company continued to pursue its growth strategy despite the fact that global economy was in shambles and the oil industry had been at crossroads since later half of 2008. The growth vehicle of ONGC, “ONGC VIDESH LTD.” With 40 projects in 15 countries sourced 8.87 MTOE of oil and gas in FY 2010: the highest ever. Beyond core activities of E&P, the company’s efforts towards new gas sources are also laudable. CBM production from the pilot Parbatpur, Jharia project has started in January 2010. Environmental clearance from UCG pilot project at Vatsan, Gujarat has also been obtained. The company has also taken lead in the exploration of shale...
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...Outflows Accounting 544 / Internal Control Systems Department of Accounting February 16, 2015 Organizations are always fighting to prevent fraud from happening in their day-to-day operations. Fraud can occur almost anywhere within an organization, but it is common in areas of the expenditure cycle because of inadequate recording of transactions or the uncertainty of when to record transactions. When actions such as these occur, the organizations financial statements are understated which causes concerns for financial statement users. For these reasons, organizations need to implement strong internal controls to prevent errors or fraudulent activities from occurring within their daily operations. Team B will discuss several proposals for implementing appropriate controls to cover purchasing, accounts payable, cash disbursements, finance, investment, and payroll. Purchasing According to Louwers, Ramsay, Sinason, and Strawser (2007), purchasing is the gaining of goods or services for the expenditure of cash. It affects more accounts in the general ledger than any other action. It affects inventory, cash, and accounts payable just to name a few (Chapter 8, Acquisition and Expenditure Cycle). Typical source documents for purchasing include invoices from suppliers and vendors, purchase orders, receiving reports made when orders arrive, purchase journal, and fixed asset report. There may be occasions when some items in inventory is unaccounted for due to missing documents. Items...
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