As explained in this chapter and in previous chapters, revenue recognition is likely to have the potential for material misstatement at most audits. Recall that orders for cleaning are placed two or more days ahead of time and paid for by credit card at the time of booking. Jim records sales in his accounting records, from the internet transactions.
REQUIRED
a. What sales audit assertions are subject to misstatement at CondoCleaners.com?
b. What data would you ask Jim, the owner of Condo- Cleaners.com, to include in his accounting records to ensure adequate tracking of sales information is possible?
c. List the audit procedures that you would conduct to audit revenue recognition at CondoCleaners.com. For each audit procedure, list the audit assertion that it addresses, and state the risk of misstatement that it addresses.