Page 72 - Auditinf Electronic System

Chapter five

Acquisition and payment cycle

In this chapter we will cover the following:

1-Financial statement Cycles meaning

2-Classes of transactions in sales and Collection Cycle

3-Auditing Acquisition and Payment Cyc7l2e
First: Business functions in Acquisition and Payment Cycle and the related

documents:

Second: Designing tests of controls and substantive tests of transactions for
Acquisitions

Third: Design test of Details for accounting Payable and property plant and
equipment Balances

Financial statements Cycle

Audits are performed by dividing financial statements into smaller segments
or components. The division makes the audit more manageable and aids in the
assignments of tasks to different members of the audit team. A company way to
divide an audit is to keep closely related types of transactions and account balances
in the same segment. This is called the cycle approach.

Ex: Purchases, Purchases R& A, Purchase discounts, expenses and
acquisition of assets, are classes of transactions that causes accounts payable to
increase or decrease. Therefore, they are all parts of Acquisition and Payment
Cycle

classes of transactions in Acquisition and Payment Cycle

The objective in the audit of the acquisition and payment cycle is to evaluate
whether the accounts affected by the acquisitions of goods and services and the cash
disbursements for those acquisitions are fairly presented in accordance with
accounting standards.

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‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬