Acquisition & Expense Cycle
This is the assertion we are most concerned with in the acquisition and expense cycle.
What is completeness?
This assertion is the most important when evaluating inventory.
What is Existence?
This is the main purpose of an attorney letter.
This is the report given when an organizations get a "clean" opinion.
What is the standard report, or unqualified opinion?
These are the items included in a "3-way match".
What are purchase order, receiving report, and invoice?
This is the assertion auditors are concerned with when considering obsolete inventory.
What is valuation?
This is when the auditor has substantial doubt about an entity's ability to stay in business for the next year.
What is a going concern?
This is when an auditor would issue a qualified report.
What is a material but non-pervasive deviation from GAAP or scope limitation?
These are common risks associated with the acquisition and expenditure cycle.
What are risk of unrecorded liabilities, risk of noncancelable purchase agreements, and risk of inappropriate capitalization of expenses?
This is the assertion auditors are concerned with when considering consignment inventory.
What is rights and obligations?
This letter is given from management to the auditors to express that management is taking responsibility for the financial statements.
What is written representation or the management representation letter.
This is when an auditor would issue an adverse report.
What is a material and pervasive GAAP deviation?
This area, related to acquisition and expenditure, was called "Self-Policing".
What is the Payroll Cycle?
This document is used in by the purchasing department to place orders for materials.
What is materials requisitions.
This is when an auditor finds out new information about events that happened during the year under audit after they have released their auditors report.
What is a subsequently discovered fact?
This is when an auditor would issue a disclaimer of opinion.
What is a material and pervasive scope limitation?
These are the four steps in the acquisition and expenditure cycle.
What are (1) purchase goods and services, (2) receive goods and services, (3) record the asset or expense and related accounts payable, and (4) pay vendor?
This is the term used to describe the process of testing both existence and completeness at the same time.
What is dual-direction testing.
What are roll-forward procedures?
These are organizations that have stock sold on open markets, and the standards they must follow.
What are issuers and PCAOB?