You are on page 1of 3

Bradmark Comprehensive Case

Chapter 9 – Revenue Cycle
Questions
Read the Bradmark Case located in the “Bradmark Case Description” folder and answer the following
questions:
1) From the case description and the associated flowcharts, assess Bradmark’s internal controls over its
revenue cycle procedures.
2) Using the case description, the flowchart, the file structures, and the selected financial data below,
specify an audit objective (that can be achieved using ACL™) for each management assertion presented
in the matrix below. For each audit objective, briefly describe the ACL test procedure. As an example,
the first row in the matrix has been completed for you.
Selected Bradmark Financial Data
Sales

5,379,996.96

Accounts Receivable
Allowance for Doubtful Accounts (.02 x Sales)
Net Accounts Receivable

Management
Assertion

4,752,257.70
107,600

Audit Objective

Existence or
Occurrence

Verify that the AR
represents actually
owed to Bradmark

Completeness

Determine that A/R
represent all amounts
owed by organization
for purchases of goods
and services as of the
balance sheet date.

4,644,657.70

Audit Procedures to
be Performed Using
ACL
Use ACL to prepare
confirmation letters
for customers
Review sales invoices
for unusual trends and
exceptions
Review Sales Invoice
and Shipping Log
Files For Missing and
Duplicate Items

Ensure that shipped
goods, services
rendered, and/or
returns and allowances Review Line Item and
for period are included Inventory Files for

4) Using the matrix format below. . To do so follow the instruction on the CD that came with the textbook. Hand in a report describing the audit tests and your conclusions about the results of the test. Briefly describe the audit objective and ACL procedures to answer this concern. based on correct prices amd quantities. 3) Perform the ACL tests outlined in step 2 above. To document your findings include in your report ACL printouts showing details of test results and the command log. Perform the ACL test and prepare a report with your conclusions. ACL will automatically open the case. identify an operational (business) concern related to the revenue procedures. Document your report with ACL printouts showing details of test results and the command log. sales invoice file. Download these files to your computer and click on the Bradmark 04 ACL icon. remittance file are mathematically correct Review Line Item and And agree with GL Inventory Files for accounts Sales Price Accuracy To answer parts 3 and 4 requires that you install ACL™ Desktop Edition (full educational version) on your computer. The ACL Project and ACL files used in the Bradmark case are located in the Bradmark Data Folder on the website.Management Assertion Audit Objective in financials Valuation or Allocation Determine AR balance stated in net realizable value Establish allocation for uncollectible accounts is appropriate Accuracy Ensure that revenue transactions are accurately computed. Audit Procedures to be Performed Using ACL Sales Price Accuracy To determined what are the unrecorded assets (AR) Corroborate or refute AR is stated at reasonable Net Realizable Value (Aging A/R) Review sales invoices for unusual trends and exceptions Review Sales Invoice and Shipping Log Files For Missing and Duplicate Items Ensure AR subsidiary ledger.

Billings customers for products held by seller Audit Objective Audit Procedures to be Performed Using ACL .Focus on large and unusual transactions. especial ly near periodend .Recognizing revenues BEFORE they are realized .Shipping unsolicited products to customers. subsequently returned .Underestimating allowance for doubtful accounts .Recognizing revenues from sales that did not occur .Failing to recognize cutoff points .Other Operational Concerns .