Respond to your fellow classmates with at least a 100-word reply about their Primary Task Response regarding items you found to be compelling and enlightening. To help you with your discussion, please consider the following questions:
- What did you learn from your classmate’s posting?
- Do you agree with their finding and justifications for the selection (support your position)?
- What clarification do you need regarding the posting?
- What differences or similarities do you see between your posting and other classmates’ postings?
**Responding to Essay Below**
In order for any audit to be successful and done properly there are a few things that need to be listed in the objectives. Also the areas of review need to be listed to eliminate any confusion. Reviewing the relevant cycles used in business, specifically in accounting will need to be reviewed. Cycles is a term used to show multiple accounts that affect each other. There are many business cycles that are relevant to accounting. You have revenue, expenditures, production, HR/payroll, and financing. They all are essential to accounting but they are more relevant in making sure they are followed when conducting an audit for a company.
The expenditures cycle is used with vendors and suppliers to purchase goods.
The production cycle works with the expenditure cycle by taking those raw materials that was purchased and creating a finished product.
HR/ Payroll cycle is used to pay for the labor done to create the finished product.
The financing cycle gets money to fund all projects and to pay for the labor.
Finally, the last cycle I would like to talk about is the revenue cycle. This cycle ties all the cycles together. Money is used from the revenue cycle to go through the financial cycle.
There are 3 types of management assertions, or tests, used in an audit: Account Balances, Class of transactions, and lastly presentation and disclosures. When it comes to the audit objectives many of them pair with management assertions. For example, the existence of asset and liability accounts matter because this will be pulled from the balance sheet. The completeness of transactions, disclosures can also affect the accuracy of the account balances. Management should disclosure any information asked by the auditor pertaining to account balances because the auditor has the right to view and is obligated to write the report of all assertions used.