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Lecture 15 Revision. Topics for revision. Internal control Audit planning and audit program Sales and collection cycle I & II Acquisition and payment cycle Other cycles Completion of the audit. Internal control. Internal control Definition Limitations of internal control
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Topics for revision • Internal control • Audit planning and audit program • Sales and collection cycle I & II • Acquisition and payment cycle • Other cycles • Completion of the audit
Internal control • Internal control • Definition • Limitations of internal control • Objectives of designing effective internal control • Components of internal controls • Obtaining understanding of internal control • Assessment of control risk • Tests of controls
Audit planning & audit program • Types of tests • Types of evidence • Audit program • Summary of audit process
Audit of sales & collection cycle I • Sales and cash receipts transactions • Classes of transactions and accounts • Business functions, documents & records • Understanding internal control • Design and perform tests of control • Design and perform substantive tests of transactions
Audit of sales & collection cycle II • Substantive tests of account balances • Methodology for designing substantive tests • Design & perform analytical procedures • Design & perform tests of details of balances for A/R • Confirmation of A/R
Acquisition & payment cycle I • Acquisition & cash payments transactions • Classes of transactions and accounts • Business functions, documents & records • Understanding internal control • Design and perform tests of control • Design and perform substantive tests of transactions and analytical procedures
Acquisition & payment cycle II • Substantive tests of account balances • Design and perform tests of details of balance for A/P • Out- of- period liability test • Cut-off tests
Inventory & warehousing cycle • Business functions, documents & records • Audit of cost accounting • Analytical procedures • Physical observation of inventory • Audit of pricing and compilation
Payroll & personnel cycle • Business functions, documents & records • Methodology for designing tests of control and substantive tests of transactions • Design & perform analytical procedures • Design & perform tests of details of balances
Audit of transaction cycles & balances • Audit of general cash accounts • Audit of PPE • Audit of prepaid expenses • Audit of accrued liabilities • Audit of capital acquisition & repayment
Completion of the audit • Steps in completing the audit • Audit procedures for finding contingent liabilities • Audit procedures for subsequent events • Final evidence accumulation • Management representation letter • Evaluate results & communication
Final exam format • Closed book exam • Time allowed: 120 minutes • Structure: • MCQ: (30 marks) 20 questions • Question 1: (25 marks) Test students on types of audit cycles, audit objectives, types of evidence, types of tests
Final exam format • Structure (continued) • Question 2: (15 marks) Theory question covering audit of sales & transactions cycle, audit of A/R • Question 3 (15 marks) Test students on internal control • Question 4 (15marks) Theory question covering audit of acquisition & payment, other cycles and balances
Final exam format • Structure (continued) • Question 4 (15 marks) Exclude cost accounting in inventory, inventory pricing compilation, audit of prepaid expense, audit of accrued liabilities and capital acquisition & repayments.