Revenues & Expenses

Revenues

100

What financial statement document is revenue typically found on?

Income Statement

200

What is a significant risk associated with revenue?

Improper revenue recognition due to fraud

300

What are common documents we should request when performing a test of details? (Must name 3)

SO's / PO's, shipping documents, invoices, agreements, proof of payment.

400

What sampling form is required when performing a test of controls? (name both)

CX-10.1: Test of Controls Form, CX-10.2: Test of Controls sampling planning and evaluation form.

500

What are the five steps of the revenue recognition process?

1. Identify the contract with the customer

2. Identify the performance obligations

3. Determine the transaction price

4. Allocate the transaction price

5. Recognize revenue when obligations are satisfied

Expenses

100

What are some common workpapers found in the expense section of an engagement? (Name two)

Legal fees, payroll reconciliation / payroll report, Monthly P&L, Expense leadsheet, audit programs.

200

What documentation is typically requested when testing legal fees?

Legal invoices

300

Identify the risk that is associated with expenses?

understatement of expenses by the client.

400

What are some components of a payroll reconciliation?

Prior year accruals, current year accruals, payroll for the CY, bonuses, PTO.

500

What assertions are most relevant to expenses?

Completeness & Cutoff (typically tested within liabilities).

Analytics

100

What are common workpapers in which analytics are performed? (Name 2)

Monthly P&L, Monthly LoS, Leadsheets, Preliminary analytics workpaper, final analytics.

200

What is the purpose of performing analytics?

To lower risk.

300

What are some common analytics that can be performed on the monthly P&L workpaper?

Gross profit ratio, Net profit ratio, Monthly revenues as a % of YTD revenues, etc.)

400

If you notice significant fluctuations when performing analytics, what is the next step that should be taken?

Compare the fluctuations to your expectations, and if necessary, make inquiries with the client.

500

What is the first step in performing analytical procedures?

Formulating expectations