[AUD] Accounting cycles

Sales cycle

Cash receipt cycle

 

 

Cash disbursement cycle

 

 

Cash handling vs Record keeping vs Bank reconciliation

each prepared by an independent individual

 

  Lapping ( Record keeping + custody of cash)

Prevention	Detection
- segregation of duties - Lockbox	- Monthly statement - Bank deposit slip

 

  Sales returns

   sales return: received & examined by the receiving department(shipping)

   Credit memo: reduce invoice amount, prepared & Approved by not cash custody person(Treasury)

   * Debit memo: increase invoice amount

 

Inventory cycle

Physical control(custody)

Perpetual records(recording)

> periodically compared

 

unit cost records

standard costing(strong control, valuation assertion)

 

valuation, allocation, accuracy assertion

> mathematicla computation of the inventory report + reconciling to the inv general leger

> reviewing direct labor rates and testing the computation of the standard overhead rates used

> performing inventory price test

Payroll cycle

 

Payroll Dept.(R)

- approved time card

- pay rate

> compute wages

> unsigned payroll checks

 

Treasurer(C)

sign checks

Distribute payroll checks

 

Fictitious employees(Existence)

Prevention	Detection
- prompt notification - segregation of duties   (authorized time card, pay rate)	- Budget system(independent review) - Observe check distribution on a surprise basis - Vouch pay rate(payroll register > authorized pay rate) - Vouch working time(payroll register > authorized time card)

* payroll tax form > unpaid tax

* payroll tax =  unemployment tax + other tax (calcul each)

* range test : 갑툭튀