Audit Program Design Part Iii

Stock and Warehousing Cycle The review of the stock and warehousing cycle is intended to test stock tallies, procedures, and tasks. The classes of exchanges in this cycle incorporate deals, estimation of stock, cost of merchandise sold, deals returns and recompenses, and gauges of stipend for moderate moving stock. Trial of Controls and Substantive Tests of TransactionsTable WK6-1 shows the interrelationships of the exchange identified with review goals, trial of controls, and meaningful trial of exchanges that ought to be affirmed during the review procedure of Apollo Shoes, Inc. Table WK6-1. Stock Warehousing Cycle Tests of Controls and Substantive Tests of Transactions Audit Design (Arens, Elder, & Beasley, 2006) Inventory †Apollo Shoes, Inc.Transaction-Related Audit Objectives †Tests of Controls †Substantive Tests of Transactions| Transaction-Related Audit Objective| Tests of Controls| Substantive Tests of Transactions| Inventory as recorded on labels exist s (presence). | * Select an arbitrary example of label numbers and distinguish the tag with that number appended to the genuine stock. | * Observe whether development of stock happens during the tally. | Existing stock is tallied and labeled, and labels are represented to ensure none are missing (fulfillment). * Examine stock to ensure it is labeled. | * Observe whether development of stock happens during the check. * Inquire as to stock in different areas. | Inventory is checked precisely (exactness). | * Recount client’s tallies to ensure the recorded checks are exact on the labels (additionally check portrayals and unit of tally, for example, dozen or gross). * Compare physical tallies with unending stock ace record. | * Record client’s means ensuing testing. Stock is arranged accurately on the labels (order). |* Examine stock portrayals on the labels and contrast and the genuine stock for crude material, work-in-process, and completed merchandise. | * Evaluate whet her the percent of culmination recorded on the labels for work-in-process is sensible. | Information is gotten to ensure deals and stock buys are recorded in the best possible time frame (cutoff). | * Record in the review documents for resulting follow-up the last getting report number utilized at year-end. * Make sure the stock for the above thing was remembered for the physical check. | The customer has rights to stock recorded on labels (rights). | * Inquire about transfer or client stock remembered for client’s premises. | * Be alert for stock that is saved or exceptionally set apart as signs of non-proprietorship. | Analytical Procedures Analytical strategies can be played out a few times during a commitment: * In the arranging stage to help with deciding the nature, degree, and timing of work to be performed. During the testing period of the review related to the review strategies, and * During the fruition period of the review as a last survey for material misquotes fo r budgetary issues and to enable the reviewer to take a last â€Å"objective look† at the fiscal reports that have been examined (Arens, Elder, & Beasley, 2006, p. 208). Arens, Elder, and Beasley (2006) clarify that one of the most significant investigative methods for revealing misquotes of the Inventory and Warehousing Cycle are contrasting present and earlier year.Analytical systems for the monetary record and salary articulation accounts in the Inventory and Warehousing Cycle are introduced in Table WK6-2. Table WK6-2. Stock and Warehousing Cycle Analytical Procedures (Arens, Elder & Beasley, 2006) Cash Cycle The accompanying trial of controls and meaningful trial of exchanges for the Cash Cycle examined by Arens, Elder, and Beasley (2006) are intended to guarantee presence, culmination, exactness, characterization, timing, and summarization.Table WK6-3 shows the structure of trial of controls and considerable trial of Cash Cycle. Trial of Controls and Sub stantive Tests of Transactions Cash †Apollo Shoes, Inc. Exchange Related Audit Objectives †Tests of Controls †Substantive Tests of Transactions| Transaction-Related Audit Objective| Tests of Controls| Substantive Tests of Transactions| Cash in the bank as expressed on the compromise exists (existence)| * Receipt and trial of a bank affirmation. | * Proof record exists and parities are exact. Existing money stashed away is recorded (fulfillment). | * Receipt and trial of a cutoff bank articulation. | * Tests of the bank reconciliation| Cash in the bank as expressed on the compromise is precise (exactness). | * Tests of the bank compromise. * Extended trial of the bank compromise. | * Tests for kiting. * Proof of money. | Cash in the bank is appropriately introduced and revealed (introduction and divulgence). |* Examine minutes, credit understandings, and acquire affirmation for limitations on the utilization of money and repaying balances. * Review fiscal reports to en sure (a) material investment accounts and declarations of store are revealed independently from money in the bank,(b) money confined to specific uses and remunerating balances are enough uncovered, and (c) bank overdrafts are incorporated as present liabilities. | Cash receipts and money distributions exchanges are recorded in the best possible time frame (cutoff). | * Cash receipts:Count the money close by on the most recent day of the year and thusly follow to stores in travel and the money receipts diary. Money disbursements:Record the keep going check number utilized on the most recent day of the year and in this way follow to the extraordinary checks and the money distributions journal| * Trace stores in travel to resulting period bank proclamation (cutoff bank explanation). * Trace exceptional checks to ensuing period bank explanation. | Table WK6-3. Money Cycle Tests of Controls and Substantive Tests of Transactions Audit Design (Arens, Elder, & Beasley, 2006) Analyti cal Procedures Analytical techniques for the asset report and pay articulation accounts in the Cash Cycle are introduced in Table WK6-4.Table WK6-4 Cash Cycle Analytical Procedures (Arens, Elder, & Beasley, 2006) References Arens, A. A. , Elder, R. J. , & Beasley, M. S. (2006). Reviewing and confirmation benefits: an incorporated methodology (eleventh ed. ). Upper Saddle River, NJ: Pearson. Louwers, T. J. , & Reynolds, J. K. (2007). Apollo shoes, inc. : A review case to go with evaluating and affirmation administrations. [University of Phoenix Custom Edition e-Text]. New York, NY: McGraw-Hill/Irwin. Recovered from University of Phoenix, ACC546 †Auditing site.