Question

Discuss your ability to use specialized audit tools including sampling methods. Can you be an effective auditor without using these tools when auditing transaction cycles such as the Revenue Cycle? Explain.

Answer 1

solution:

audit tool

A generic term for any (usually computerised) instrument (e.g., Formic’s Fusion software), which may beused to capture data so that audit departments can undertake audit projects including document audits, essence of careaudits, infection-control audits, identified risk audits, local priority monitoring, national audits, NICE guideline complianceaudits, National Service Framework compliance, Standards for Better Health and Commissioner assurance.

Audit tools improve precision in the audit process, relieving pressure on resources within clinical audit departments, andproviding an automated mechanism for accurately processing survey forms.

Sampling Methods:

Stratified sampling is commonly used probability method that is superior to random sampling because it reduces sampling error. A stratum is a subset of the population that share at least one common characteristic. Examples of stratums might be males and females, or managers and non-managers.

Revenue cycle:

revenue cycle. A different perspective on the normal sales cycle in which calculations begin on the day the company meets the potential customers and follows the transactions throughout the sales period, continuing on with the future relationship between company and customer.

As part of a financial audit, the auditor must assess the inherent risk associated with the revenue cycle and perform tests to determine it is relatively free of error or fraud. The inherent risk for this cycle is related to the cutoff dates for particular types of sales and the pressures from management to misstate revenues. By conducting so-called substantive tests and tests of controls, the auditor can provide some assurance that the revenues of the company are recorded accurately.

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