AUD-Lesson 3_Revenue Cycle_Audio: Internal Control Continued Flashcards

1
Q

What are the segregation of duties?

A

ARCC

Authorization of transactions

Recording (posting) of transactions

Custody of assets

Comparisons (Compare what got recorded actually got deposited)

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2
Q

How do you test controls (Tests of ARCC)

A

RIO

Reperformance

Inspection

Inquiry

Observation

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3
Q

What is the function of internal controls?

A

To prevent misstatements before they occur (most effective), or to detect and correct misstatements (least effective)

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4
Q

What kind of risk does cash have?

A

Cash has increased inherit risk and needs a lot of key controls

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5
Q

What is the PPN Accronym for documentation controls?

A

Preprinted, Prenumbered, Numerically Controlled

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6
Q

Which departments get a copy of the Sales Order?

A
Originator
Credit Department
Billing
Warehouse
Shipping
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7
Q

What are the steps followed once payment is received?

A

The receptionist opens the mail, and stamps the CHECK for Deposit Only (restrictly endorsing) and does nothing else in ARCCS.
-The remittance advice is then sent to Accounting so that the payment can be recorded

A REMITTANCE LISTING is prepared (A listing of all of the checks received)

DEPOSIT SLIP is prepared, and the checks are sent to the bank
-The Deposit Package to The Bank includes the checks, and Remitance Listing

BANK RECONCILIATION
-What deposited actually got recorded

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8
Q

What is tracing?

A

Traces from the source, into the books are records

It tests the completion assertions

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9
Q

What is vouching?

A

Goes from the Book back to the source

This tests the existence or occurence assertion

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10
Q

What are the documents in the Revenue Cycle?

A
The customer purchase order
The Sales Order 
The Bill of Lading.
The Sales invoice
Payment. (Check and Remittance Advice)
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