[lauriemarie5]

Does anyone have any tips on how to better understand the transaction cycle?

All the assertions get to be quite confusing and I am trying to find a way to better sort them out so everything isn’t so tricky.

I am working on A5 right now (Sampling) and I still find A4 to be the most challenging and confusing.

REG: 80 (11/13/15)
FAR: APR 2016
BEC
AUD

"Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Winston Churchill

[letmepassalready88]

Hey,

I'm on the same boat. I'm confused too. I'm using becker and on pg. A4-18, it gives you a very generic idea of what type of audit procedures are used to test which assertions. Then i'm reading through the trans cycle and flipping back to page to match up the audit procedures For example, they would use confirmations to test for accuracy of the balances of A/R but you won't see confirmation listed as one of the auditing procedures for Valuations. I know the diagram is generic, but how would i know that this is one of the ways to test for valuations. Do I just need to memorize it?

[letmepassalready88]

Hey,

I'm on the same boat. I'm confused too. I'm using becker and on pg. A4-18, it gives you a very generic idea of what type of audit procedures are used to test which assertions. Then i'm reading through the trans cycle and flipping back to page to match up the audit procedures For example, they would use confirmations to test for accuracy of the balances of A/R but you won't see confirmation listed as one of the auditing procedures for Valuations. I know the diagram is generic, but how would i know that this is one of the ways to test for valuations. Do I just need to memorize it?

[barelystayingsane]

@letmepassalready88 as much as it makes sense for confirmations to be a test of accuracy, they do not test that assertion, because the confirmation gives no indication as to whether or not the client's customer will be able to pay (i.e., what the real value of the receivable is net of the allowance for doubtful accounts). Confirmations really only provide evidence on the assertions of existence and rights.

[barelystayingsane]

@letmepassalready88 as much as it makes sense for confirmations to be a test of accuracy, they do not test that assertion, because the confirmation gives no indication as to whether or not the client's customer will be able to pay (i.e., what the real value of the receivable is net of the allowance for doubtful accounts). Confirmations really only provide evidence on the assertions of existence and rights.

[letmepassalready88]

barelystayingsane

I agree with you. In the Becker book under the generic diagram of assertion and related auditing procedures, confirmation is listed as the procedure to test for Existence and Occurence. But then i'm reading about the transaction cycle and it saids to test for balances of A/R Valuation, allocation and accuracy assertions, it saids to examine the results of confirmation. It's conflicting and it's confusing me.

[letmepassalready88]

barelystayingsane

I agree with you. In the Becker book under the generic diagram of assertion and related auditing procedures, confirmation is listed as the procedure to test for Existence and Occurence. But then i'm reading about the transaction cycle and it saids to test for balances of A/R Valuation, allocation and accuracy assertions, it saids to examine the results of confirmation. It's conflicting and it's confusing me.

[barelystayingsane]

Huh. You're right. Well, count me in as frustrated too then.

[barelystayingsane]

Huh. You're right. Well, count me in as frustrated too then.

[Malissa]

Confirmations are used for existence, as in, yes these AR balances exist.

Valuation is looking at the history of the customer and their credit worthiness, as in, yes these balances can be collected. Rather than writing them down 10% because of a good chance of default on 1/10 of the balance.

F-81
B-81
R-75
A-waiting...failed twice third time's the charm right?

[Malissa]

Confirmations are used for existence, as in, yes these AR balances exist.

Valuation is looking at the history of the customer and their credit worthiness, as in, yes these balances can be collected. Rather than writing them down 10% because of a good chance of default on 1/10 of the balance.

F-81
B-81
R-75
A-waiting...failed twice third time's the charm right?

[Author]

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