Question

James and Katie will be auditing the revenue account for their retail client, Go Big Tires. They disagree about how to test the occurrence assertion for the revenue account. James thinks they should use Procedure A, while Katie thinks Procedure B is appropriate.

A.		Select a sample of sales from the sales journal and agree the details in the journal to the invoices sent to customers, shipping documents, and customer orders.
B.		Select a sample of invoices sent to customers, shipping documents, and customer orders and agree to the details recorded in the sales journal.

Who do you agree with, James or Katie, and why? Which assertion does the other procedure provide evidence about?

Answer 1

James and Katie will be auditing the revenue account for their retail client – Go Big Tires . They are following two approach A and B . Both approach represents that we need to complete transaction checking in case of Revenue generation , Invoice sample , documents supporting with revenue recognition like shipping documents , customer order etc to ensure that transactions are smooth and recognised revenue in the book as per Standard .

I will go with Proposal A – This proposal represents that Select Sample of Sales from the sales Journal and agree the details in the Journal to the Invoice sent to customer , shipping documents and customer order . This approach Quite process oriented to ensure that revenue has been recognised correctly into the system and Invocing process , shipping document m customer order document are in process and justify correctly about correct way of revenue recognition