Lesson: Auditing the Revenue Cycle

This lesson provides an overview of segregation of duties and internal controls related to the revenue cycle, emphasizing the importance of professional skepticism. The lesson also highlights the significance of accurate revenue reporting, whether it is overstated or understated, and the potential impact of errors and fraud. Essential aspects of segregation of duties and tests of controls, such as authorization, record keeping, and custody of assets are examined in detail, along with various methods for testing the effectiveness of these controls. The lesson also delves into specific internal controls unique to the revenue cycle, outlining the auditor's approach to conducting tests of controls by observing employees and reviewing supporting documents. Overall, this lesson equips the audience with a thorough understanding of the critical aspects of auditing the revenue cycle and its associated controls.