Week 7

The revenue cycle requires regular review. Identify at least two types of misstatements found in the revenue process. Next, identify a sound, timely internal control to detect and correct this misstatement.

The respond post:

Two types of misstatements found in the revenue process consists of

1. The volume of sales, cash receipts, and sales adjustment transactions is often high, resulting in numerous opportunities for errors to occur. Making sales to fictitious customers can be a misstatement found in the revenue process.
2. Recording revenue for goods or services that were not shipped or performed can be a misstatement found in the revenue process. 
   

Some internal controls around these aspects of the revenue cycle are to ensure separation of duties, limiting the number of people involved in these transactions, appropriate level of review and approval etc..  Auditors can test the internal controls and re perform the tests of these controls.  Inspection of the documents and records can also assist in detecting these misstatements