Student Forums CIA Part 2: Practice of Internal Auditing Section II: Planning the Engagement CIA 1195 1.20(Topic:D. Determine Engagement Procedures and Prepare Work Program)

CIA 1195 1.20(Topic:D. Determine Engagement Procedures and Prepare Work Program)

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  • #225124

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    Mitalee Chowdhury
    Participant

    Qs. The internal auditor for a diversified organization is performing a preliminary analytical review of the home building division. The division accounts for approximately 15% of the organization’s revenues and profits. It operates in the Southwest region of the country and has been growing rapidly. New management took over the division during the early part of 2009 and has been very aggressive in pushing market share and growth. Management is considering expanding operations to new regions because of (1) demonstrated growth and profitability potential; and (2) a potential slowing of growth in the Southwest region. The division views itself as the efficient home builder in the region. The following data have been compiled for your review. Which of the following audit procedures should be performed to verify the accrued revenue recorded for the jobs in progress account at year-end 2010
    Can you explain/elaborate more on the below option:-
    II. Perform detailed tests of the job cost build-up for the jobs in progress to determine that all costs have been properly assigned.
    what is cost doing in this analysis?

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    Brian Hock
    HOCK international

    The internal auditor is testing to confirm that all of the costs that have been assigned to the jobs should have been assigned to the jobs. Those costs that are assigned are going be part of the accounting process for revenue to be able to be recognized. So, it is making certain that the basis for the revenue recognition is correct.

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