Form AP 70

Index Reference__________ Audit Program for Revenues and Expenses Legal Company Name Client:

Balance Sheet Date: Instructions: The auditor should refer to the audit planning documentation to gain an understanding of the financial reporting system and the planned extent of testing for revenues and expenses. Modification to the auditing procedures listed below may be necessary in order to achieve the audit objectives. All audit work should be documented in attached working papers, with appropriate references noted in the right column below.

Audit Objectives Billings are for the correct amount; revenues are recorded correctly as to account, amount, and period; and uncollectible amounts, sales returns, and allowances are adequately provided for. All revenues earned during the year have been recorded; and recorded revenues represent valid transactions applicable to goods shipped or services rendered. Expenses and costs of products and services are valid, complete, and recorded correctly as to account, amount, and period. Recorded expenses include costs which are properly allocable to the year and are properly matched with revenues.

Financial Statement Assertions Existence or occurrence Completeness Rights and obligations Valuation or allocation Existence or occurrence Completeness

Existence or occurrence Completeness Rights and obligations Valuation or allocation Existence or occurrence Completeness Valuation or allocation

Revenues, costs of revenues, income, and expenses are Presentation and disclosure properly classified in the statement of operations, and adequate disclosures are made in accordance with IAS,

including: extraordinary items, discontinued operations, unusual or infrequent items.

Performed By 1. Perform the following analytical procedures for revenues and expenses, and investigate any significant fluctuations or deviations from the expected balances: a. Compare monthly sales by product line or geographic area for the current year with monthly sales for the prior year and the first few months subsequent to year end. b. Compare monthly sales returns and allowances and credit memos for the current year with those of the prior year and the first few months subsequent to year end. c. Compare gross margins by product line or geographic area for the current year with the prior year and budget. d. Compare other operating relationships (e.g., both sales and cost of sales to units shipped) for the current year with the prior year. e. Compare the current years composition of total product cost (i.e., materials, labor, and overhead) with the prior years. f. Compare the relationships of current-year payroll expense to cost of sales and sales with the prior years. g. Compute payroll tax expense as a percentage of total wages and salaries and compare with the prior years. h. Compare current year other income account balances with the prior years. i. Compare current year other income account balances with budgeted amounts.

Workpaper Reference

Performed By j. Compare current year expense account balances with the prior years. k. Compare current year expense account balances with budgeted amounts. l. Calculate individual expense categories as a percentage of total expenses for the current year and compare with the prior years percentages. 2. Test sales for overstatement by selecting several sales recorded in the sales journal, for each month, and compare amounts and other information to shipping documents. 3. Test sales for understatement by selecting several shipping documents, for each month, and compare information to sales invoices and determine if the sales were properly recorded. 4. For expense accounts that are material or high risk, select individual large disbursements or accruals and examine the supporting documentation (e.g., vendor invoice, payment orders, etc.); consider examining the propriety of the balances in the following accounts: a. Rent b. Repairs and maintenance c. Legal and professional fees d. Travel and entertainment expenses e. Salaries f. Social insurance g. Miscellaneous expenses h. Other expense categories selected by the auditor (specify accounts below): 5. Scan the general ledger and other accounting records for large and unusual income and expense transactions and review supporting documentation. 6. Ascertain that revenues, costs of revenues, income,

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Performed By and expenses are properly classified in the statement of operations and adequate disclosures are made in accordance with IAS.

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Based on the procedures performed and the results obtained, it is my opinion that the objectives listed in this audit program have been achieved. Performed by Reviewed and approved by Conclusions: Comments: Date Date