Question: The auditor needs to understand how selected inherent risk factors
The auditor needs to understand how selected inherent risk factors affect the transactions processed by the revenue process. Discuss the potential effect that industry- related factors and misstatements detected in prior periods have on the inherent risk assessment for the revenue process.
Answer to relevant QuestionsIn understanding the accounting system in the revenue process, the auditor typically performs a walkthrough to gain knowledge of the system. What knowledge should the auditor try to obtain about the accounting system?Distinguish between positive and negative confirmations. Under what circumstances would positive confirmations be more appropriate than negative confirmations?The “ Accounts Receivable— Confirmation Statistics” working paper shown on the next page was prepared by an audit assistant for the 2013 audit of Lewis County Water Company, Inc., a continuing audit client. The ...What major types of transactions occur in the purchasing process? What financial statement accounts are affected by each type of transaction? What are the differences between accounts receivable and accounts payable confirmations?
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