Audit Procedures Essay Example | Topics and Well Written Essays - 500 words

Audit Procedures - Essay Example They include order management, sales transaction, and delivery to the customer, invoicing and posting to the financial statements. It also includes short-term investments and cash equivalents. In order to know aspects of the revenue cycle of an entity the auditor looks at the general ledger, which is a primary source of financial data and with the internal controls this figures should be accurate and true. For mobile streams plc the revenue cycle may comprise of sales account, trade payables and receivables account, other incomes account, cash and cash equivalents and stock ( Georgiades, 2006, 22). Audit procedures are the tests that the auditor carries out to ascertain that the revenue is stated correctly. The auditor must understand the industry that the company belongs to and this will enable him make a comparison to see if the figures are correct. Audit procedures involve designing the tests that will be carried out on the accounts, gathering the evidence, evaluating the results of the tests, and finally making decisions on the whether the evidence is sufficient. The procedures can be classified into risk assessment and further audit procedures such as test controls and substantive procedures. The overall objective of the audit will determine the risk assessment, test controls, and substantive procedures to be used (Cangemi , & Singleton, 2003 p. 272) Risk assessment involves finding out the inherent risks associated with the transactions and this information is obtained from the financial statement and accounts and assumptions level of the company. One can also source inherent risks from the strength and weaknesses of the Internal control system or form carrying out analytical procedures. An example of inherent risk is timing of the revenue recognition and it should be guided by professional rules like IASB. Example of a test control to ascertain the validity of the revenue would be to look at