Reference no: EM133104767

Question - Auditing Procedures - Revenue, Cash, and Inventory - In this module, you will learn that tests of controls and tests of transactions are frequently viewed as the key steps in obtaining sufficient, reliable evidence for purposes of forming an audit opinion. The revenue cycle includes the examination of controls and transactions associated with the sales process, as well as the accounts receivable process. The acquisition and payment cycle include examining controls and transactions associated with the purchasing process for inventory, goods and services, and the accounts payable process. Both the Revenue and acquisition and payment cycles have an impact on the cash balance!

1. Assess preliminary analytical procedures to identify potential material misstatements in revenue, cash, and inventory accounts.

2. Develop substantive audit procedures for testing accounts associated with revenue, cash, and inventory.

3. Appraise issues involving the audit of revenue, cash, and inventory accounts according to frameworks for professional and ethical decision-making.

4. Construct appropriate tests of controls and the results of controls for revenue, cash, and inventory accounts, including the related assertions and disclosures.

5. Evaluate the results of controls for revenue, cash, and inventory accounts, including the related assertions and disclosures.

Based on the above information, what are the principal area of risk? Also, does the risk increase by the size of an organization or is it all related to the industry itself? Can you provide some examples?