Audit and Risk

Revenue data analytics

Topic 2.2 Practice question

Solution

Part A

Task 1
AAA needs the following information from JIS:

• Listing of all journals posted from 1 July 20X2 to 30 June 20X3.

• Opening trial balances as at 1 July 20X2.
• Closing trial balances as at 30 June 20X3.
• Chart of accounts.

Task 2
AAA’s data analytics team performed the reconciliation to ensure the completeness of data. The team should also
agree the opening trial balance to prior year audited financial statements and ensure the closing balance agrees with
evidence gathered in the 30 June 20X3 audit. This is to ensure accuracy of data.

Part B

Task 1
Additional procedures:

Journal 1 – AAA could corroborate this by sighting the creditor invoices for the period and ensuring they
related to the same customer (debtor) account.

Journal 2 – AAA could corroborate this by agreeing the revenue transaction to sales invoice and the original
sales contract to verify the transaction represents actual revenue.

Task 2
AAA followed up Journals 1 and 2 and corroborated them accordingly. The journals that followed the expected path
were supported by the audit procedures over receivables and cash account balances, providing sufficient, appropriate
audit evidence over the correlation between revenue, receivables and cash. However, performing this test alone
doesn’t provide sufficient appropriate evidence over revenue, as it doesn’t address all key assertions at risk.

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 Task 3
Additional procedures could include:

• Testing accuracy and occurrence of revenue transactions by matching details between proof of delivery, invoice and
cash receipts.
• Testing transactions that occurred prior to and post period end to test cut-off.

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