Week 6 discussion and participation Essay Example | Topics and Well Written Essays - 1000 words

week 6 discussion and participation - Essay ExampleThe auditor must accurately access whether the muniment counting process the company is using is adequate.The most important and valuable account in the residuum sheets of companies is the hard currency account. A company can require millions of dollars in assets, but if the firm runs out of cash they run a high risk of going out of business. An important aspect of the cash in the bank and transaction cycles is to have clear separation of duties. Tests of controls and substantive tests of transactions are required to have an effective audit of the cash balance of a company. Cash is an account that is included in some(prenominal) cycles with the exception of blood and warehousing. Cash is also one of the last cycles audited because the evidence accumulated of cash balances is drug-addicted on the other cycles. Some of the cycles that are correlated to the activities of the cash cycle areI retard with you that the most importa nt phase for designing tests of stock-taking balances is the actual observation of the inventory count. A grant of theft and fraud often occurs in this cycle because companies have inventory balances worth millions of dollars. A undecomposable way in which a company can cheat an audit is by including in its inventory goods that have become obsolete. This often occurs in technological industries such as the computer industry. As you mentioned in your response it is important for auditors to pay close attention to the internal controls that were established by the management of the company. If a company has weak internal controls the auditors have to pay closer attention to the inventory cycle to predominate out the potential of fraudulent activity.In my response to this question I also argued that designing tests of inventory balance was the most crucial phase of the audit inventory cycle. I did not know close the existence of SAS 1. It makes a lot of sense to me that auditors s hould be present during the physical inventory