Question 1

The auditor is required by the accounting standards to observe the taking of physical inventory.

Accepted Answer

Auditors are required by accounting standards to observe the taking of physical inventory to obtain audit evidence regarding the existence and condition of the inventory, as part of their audit procedures.

Question 2

When a cheque has been made for payment to a vendor, the underlying documentation and the cheque should be sent to which of the following for signature and cancellation?
A) manager
B) receptionist
C) accountant
D) accounts payable supervisor

Accepted Answer

C

Question 3

Unusual transactions, either because of their size, complexity or special terms, should require a high level management review.

Accepted Answer

Unusual transactions often carry higher risks, including financial, compliance, and reputational risks, thus necessitating review by high-level management to ensure they align with the organization's policies, risk tolerance, and legal requirements.

Question 4

All companies attempting to comply with accounting standards should refer to the Australian Securities and Investments Commission for guidance.

Accepted Answer

While the Australian Securities and Investments Commission (ASIC) oversees and enforces company and financial services laws to protect Australian consumers, investors, and creditors, companies looking to comply with accounting standards should refer to the Australian Accounting Standards Board (AASB) for guidance on financial reporting requirements.

Question 5

A red flag that may alert the auditor to fraud in the revenue cycle is a trend of revenue growth that is consistent with industry results.

Accepted Answer

A trend of revenue growth that is consistent with industry results is generally not considered a red flag for fraud, as it indicates the company is performing in line with its peers. Red flags for fraud in the revenue cycle typically involve inconsistencies or anomalies that deviate from normal industry patterns.

Question 6

Accounts receivable Controls
In the financial report, there are many risks associated with an audit that must be considered. Identify and discuss five potential fraud risk factors in the revenue cycle.

Accepted Answer

The answer of Accounts receivable Controls
In the financial report, there...

Quiz 11: Auditing Revenue, Related Accounts, Audit of Acquisition and Payment Cycle and Inventory

The auditor is required by the accounting standards to observe the taking of physical inventory.

When a cheque has been made for payment to a vendor, the underlying documentation and the cheque should be sent to which of the following for signature and cancellation?

Unusual transactions, either because of their size, complexity or special terms, should require a high level management review.

All companies attempting to comply with accounting standards should refer to the Australian Securities and Investments Commission for guidance.

A red flag that may alert the auditor to fraud in the revenue cycle is a trend of revenue growth that is consistent with industry results.

Accounts receivable Controls In the financial report, there are many risks associated with an audit that must be considered. Identify and discuss five potential fraud risk factors in the revenue cycle.