Slide Audit P2

8/14/2019 Slide Audit P2

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6.b. Basic Audit Techniques

Revenue Cycles


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Overview

The revenue cycles involves the decisionsand processes necessary for the transfer ofownership of goods and services to

customer after they are made available for

sale. It begins with a request by a customer and

ends with the conversion of material or

service into an account receivable, and

ultimately into cash.


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Classes of transactions

1. Sales (cash and sales on account)2. Cash receipt3. Sales return and allowances4. Write-off of uncollectible accounts5. Estimate of bad debt expense


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Classes of transactions Continued

Classes of transactions Sales

Accounts Sales

Account Receivable

Business Functions Processing customer orders

Granting credit

Shipping goods

Billing customers and recording sales

Documents and records Customer order

Sales order

Shipping document

Sales invoice

Sales transaction fileSales journal or listing

Account receivable master file

Monthly statement


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Classes of transactions Cash receipt

Accounts Cash in banks

Account Receivable

Business Functions Processing and recording cash receipts

Documents and records Prelisting of cash receiptsCash receipts transaction file

Cash receipt journal or listing


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Classes of transactions Sales return and allowances

Accounts Sales return and allowances

Account Receivable

Business Functions Processing and recording sales returns and

allowances

Documents and records Credit memo

Sales returns and allowances journal


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Classes of transactions Write-off of uncollectible accounts

Accounts Account Receivable

Allowance for uncollectible accounts

Business Functions Writing off uncollectible accounts receivable

Documents and records Uncollectible account authorization formGeneral journal


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Classes of transactions Bad debt expense

Accounts Bad debt expense

Allowance for uncollectible accounts

Business Functions Providing for bad debts

Documents and records General journal


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Accounts in the sales and collection cycle

Sales Cash in Bank

Sales returns

and allowances

Bad debt

expenses

Allowance for

uncollectible

accounts

Account Receivable

Cash sales

Cash

receipt

Sales

returns

Credit

sales

Write-off

Providing allowances on bad debt


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Documents and records

Customer orderA request for merchandise/service by a customer.

It may be received by telephone, letter, a printed

form that has been sent to prospective and existing

customers, through salesperson, or in other ways.

Sales orderA document for recording the description, quantity,

and related information for goods ordered by acustomer. This is frequently used to show credit

approval and authorization for shipment.


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Documents and records - Continued

Shipping documentA document prepared at the time of shipment,

indicating the description of the merchandise, the

quantity shipped, and other relevant data.

Sales InvoiceA document indicating the description and

quantity of goods sold, the price including freight,

insurance, terms, and other relevant data. It is themethod of indicating to the customer the amount

of a sale and due date of a payment.


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Documents and records - Continued

Credit Memo A document indicating a reduction in the amount due

from customer because of returned goods or an

allowance granted.

Sales Returns and allowances journal A journal that is basically the same as the sales

journal for recording sales returns and allowances.

Uncollectible account authorization forms A document used internally, indicating authority to

write an account receivable off as uncollectible.


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Revenue Recognition sale of goods

Revenue from the sale of goods shall be recognized when allthe following conditions have been satisfied:

(a) the entity has transferred to the buyer the significant

risks and rewards of ownership of the goods;(b) the entity retains neither continuing managerial

involvement to the degree usually associated withownership nor effective control over the goods sold;

(c) the amount of revenue can be measured reliably;

(d) it is probable that the economic benefits associatedwith the transaction will flow to the entity; and

(e) the costs incurred or to be incurred in respect of thetransaction can be measured reliably.


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When the outcome of a transaction involving the rendering ofservices can be estimated reliably, revenue associated with thetransaction shall be recognized by reference to the stage ofcompletion of the transaction at the balance sheet date. Theoutcome of a transaction can be estimated reliably when all

the following conditions are satisfied:

(a) the amount of revenue can be measured reliably;

(b) it is probable that the economic benefits associated withthe transaction will flow to the entity;

(c) the stage of completion of the transaction at thebalance sheet date can be measured reliably; and

(d) the costs incurred for the transaction and the costs tocomplete the transaction can be measured reliably.

Revenue recognition - services


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Revenue is recognized only when it isprobable that the economic benefits

associated with the transaction will flow to the

entity. In some cases, this may not beprobable until the consideration is received or

until an uncertainty is removed.

Revenue recognition - continued


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Measurement of Revenue

Revenue shall be measured at the fair value ofthe consideration received or receivable.

The amount of revenue arising on a transactionis usually determined by agreement between the

entity and the buyer or user of the asset. It is

measured at the fair value of the consideration

received or receivable taking into account the

amount of any trade discounts and volume-

rebates allowed by the entity.


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Disclosure

An entity shall disclose:(a) the accounting policies adopted for the recognition of revenue,

including the methods adopted to determine the stage ofcompletion of transactions involving the rendering of services;

(b) the amount of each significant category of revenue recognizedduring the period, including revenue arising from:

(i) the sale of goods;

(ii) the rendering of services;

(iii) interest;

(iv) royalties;

(v) dividends; and

(c) the amount of revenue arising from exchanges of goods orservices included in each significant category of revenue.


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Accounting for bad debts

When an account becomes uncollectible, theenterprise has sustained a bad debt loss. Two

methods are followed in accounting for bad debt

loss :

Allowance method this method requiresrecognition of a bed debt loss if the account are

doubtful of collection

Direct write-off method this method requiresrecognition of a bed debt loss only when theaccounts proved to be worthless or uncollectible.


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Accounting for bad debts

Two methods of estimating doubtful accounts:Aging the account receivable (b/s approach)Percent of sales (p/l approach)


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Tax regulations on write off of receivables

Wajib pajak dapat membebankan penghapusan piutang yangnyata-nyata tidak dapat ditagih sebagai biaya dengan syarat:

Telah dibebankan sebagai biaya dalam laporan laba rugikomersial; dan

Telah diserahkan perkara penagihannya kepadaPengadilan Negeri atau Badan Urusan Piutang danLelang Negara (BUPLN), atau adanya perjanjian tertulis

mengenai penghapusan piutang/pembebasan utang

(perjanjian restrukturisasi utang usaha) antara krediturdan debitur yang bersangkutan; dan

Telah diumumkan dalam penerbitan umum atau khusus;dan

Wajib pajak harus menyerahkan daftar piutang yangnyata-nyata tidak dapat ditagih kepada Direktorat

Jenderal Pajak.


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Journal Entries

Transactions Journal Entries

Cash Sales Cash xx

Sales xx

Credit Sales Trade receivable xx

Sales xx

Sales Return Sales return xxTrade receivable xx

Providing allowance Bad debt expense xx

Allowance for doubtful account xx

Write off of allowance for doubtful account Allowance for doubtful account xx

Trade receivable xx

Direct write off Bad debt expense xxTrade receivable xx

Recovery of written off of account receivable Trade receivable xx

Allowance for doubtful account xx


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Substantive testing of Sales andCollection cycle


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Audit Objectives

Untuk meyakinkan bahwa:

1. Piutang di neraca adalah tagihan yang nyata dariperusahaan;

2. Seluruh tagihan telah tercatat di neraca perusahaan;3. Piutang dicatat pada nilai realisasi (yang dapat

tertagih) bersih;

7. Perusahaan memiliki, atau memiliki hak hukum,terhadap seluruh piutang di neraca pada tanggallaporan keuangan; dan

8.

Seluruh piutang telah diklasifikasikan, dandiungkapkan dalam laporan keuangan secaramemadai, termasuk dalam catatan atas laporankeuangan, sesuai dengan prinsip akuntansi yangberlaku.


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Inherent Risk Factor - Business

High volume of cash receipt High customer turnover Billing disputes occur frequently Loosened credit policies Frequent change on prices of products or

services

High volume of products sold or servicerendered


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Inherent Risk Factor - Structure

Decentralized selling function Decentralized cash receipt function The invoice or credit memo function is

performed in numerous locations

Competency of the personnel Experience of the personnel Inadequate IT systems


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Analytical Procedures

1.Lakukan prosedur analitis sebagai berikut:a.Bandingkan penjualan, penerimaan kas, rata-rata

saldo per pelanggan, dan penghapusan piutang,

dengan periode sebelumnya maupun dengan

anggaran;

b.Analisis rasio penjualan dan COGS denganmembandingkan dengan anggaran dan ratio periode

sebelumnya.;

c.Analisis rasio perputaran piutang.;d.Lakukan review analitis bulanan dengan

menggunakan data yang relevan dari sumber yang

dapat dipercaya.


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Profitability Ratios

Gross Profit Margin:

(Gross Profit Revenue) x 100%

Net Profit Margins:(Income before taxes Revenue) x 100%

Return on total assets:((Income before taxes + Interest expenses) Total assets) x 100%


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Test of detail

2. Dapatkan dan periksa ketepatan matematisdari skedul umur piutang dan penyisihan

piutang tak tertagih pada tanggal neraca.

Cocokkan jumlah tercatat dengan trialbalance (TB), general ledger (GL) dan

subsidiary ledgers (SL). Minta rekonsiliasi

jika terdapat perbedaan antara jumlah

tercatat dengan TB, GL dan SL.


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Test of detail - Continued

3.

Siapkan, atau minta klien siapkan permintaankonfirmasi (termasuk piutang dengan jumlah

negatif). Pertimbangkan untuk mengirimkan

permintaan konfirmasi untuk akun dengan jumlah

nol selama tahun berjalan, tidak bergerak atau akun

yang telah outstanding lama. Siapkan WPpermintaan dan monitoring konfirmasi.


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CONFIRMATION

PositiveA communication addressed to the debtor

requesting him/her to confirm directly whether

the balance as stated on the confirmation

request is correct or incorrect.

NegativeA communication addressed to the debtor, but

it requests a response only when the debtordisagrees with the stated amount.


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CONFIRMATION - Continued

Use positives confirmations when auditor meets thefollowing circumstances:

When a small number of large accounts represents asignificant portion of total account receivable.

When the auditor believes there may be disputed orinaccurate accounts.

When there is a reason to believe the recipients of theconfirmations will not give them reasonableconsideration.

When the rules of certain regulatory agencies requirethem, such as those governing brokers and dealers insecurities.


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4. Lakukan prosedur alternatif untuk konfirmasi yangtidak diterima (contoh alternatif prosedur adalah

(1) periksa subsequent collections melalui

penerimaan kas dan/atau (2) periksa jumlah yang

outstanding dengan dokumen pengiriman, formorder pelanggan, korespondensi, dan lain-lain)

5. Simpulkan hasil permintaan konfirmasi dan/ataualternatif prosedur yang dilakukan di WP

monitoring konfirmasi, sebagaimana disebutkandalam prosedur 3 dan 4 dan investigasi adanya

pengecualian.


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6. Periksa umur saldo piutang untuk kesesuaian, danreview skedul umur piutang untuk memperoleh bukti

mengenai kolektibilitas piutang.

7. Pastikan kolektibilitas dari piutang melalui diskusidengan petugas yang berwenang, jawaban konfirmasi,pemeriksaan atas penerimaan subsequent,

korespondensi, dan lain-lain.

8. Pastikan melalui tanya jawab dan review dokumenterkait mengenai pengalaman perusahaan tentang

recovery dari piutang yang sebelumnya telahdihapuskan.


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11.Cek kredit memo yang signifikan yangdikeluarkan setelah tanggal neraca untuk retur,

diskon, penyisihan dan lain-lain.

12.Perhatikan invoice penjualan, dokumenpengiriman, dan penerimaan kas untuk transaksi

yang signifikan, untuk periode tertentu sebelum

dan setelah tanggal neraca, dan pastikan bahwa

hal tersebut telah dicatat pada periode akuntansi

yang sesuai.


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