What types of fruad, Forensic accounting for revenue, how to understand accounting for revenue, how revenue is audited what are the internal controls over revenue.

1.
Hamdy A. Rashed
2012‐01‐29
Practical & Integrated
Accounting Awareness
For Yemeni who are interesting in knowing about accounting
area
Collected by: Hamdy A. Rashed, CMA, CAPM

2. Practical & Integrated Accounting Awareness 2012
Hamdy A. Rashed | www.hamrconsult.yolasite.com
2
Contents
Chapter 7: Revenue, Receivables & Prepayments ........................................................................................ 4
Accounting Techniques ............................................................................................................................. 4
Revenue Recognition ............................................................................................................................ 4
1) Revenue recognition at point of sale (delivery) ............................................................................ 4
2) Revenue recognition before delivery ........................................................................................... 9
3) Revenue recognition after delivery ............................................................................................ 12
4) Revenue recognition for special sales transactions‐franchises and consignments. ................... 16
Accounts Receivables and Prepayments ............................................................................................ 18
Financial Reporting ................................................................................................................................. 26
Revenue .............................................................................................................................................. 26
Accounts/Notes Receivables and Prepayments ................................................................................. 30
Trade and other receivables ................................................................................................................... 31
Internal Controls ..................................................................................................................................... 32
Control Environment ........................................................................................................................... 32
Control Activities ................................................................................................................................. 32
Management Accounting ........................................................................................................................ 37
Financial Analysis ................................................................................................................................ 37
Financial Management........................................................................................................................ 39
Operating leverage and Break‐even Point ...................................................................................... 39
Credit and Receivables Management ............................................................................................. 40
Market and Statistical Analysis ........................................................................................................... 43
Pricing Decision Analysis ..................................................................................................................... 50
Audit View ............................................................................................................................................... 54
Revenue Transactions and Accounts Receivables Balances ............................................................... 54
Audit objectives for Revenue .......................................................................................................... 54
Audit objectives for accounts receivables ...................................................................................... 54
Materiality of revenue cycle ........................................................................................................... 54
Inherent Risk of revenue cycle ........................................................................................................ 55
Substantive Analytical Procedures .................................................................................................. 56
Substantive test of details ............................................................................................................... 57

3. Practical & Integrated Accounting Awareness 2012
Hamdy A. Rashed | www.hamrconsult.yolasite.com
3
Audit Working Papers ......................................................................................................................... 63
Forensic Accounting. ............................................................................................................................... 66
Fraud Risk Scenario ............................................................................................................................. 69
Lapping ............................................................................................................................................ 69
Fictitious Receivables and Ghost Sales ........................................................................................... 69
Borrowing Against Accounts Receivables ....................................................................................... 69
Hyped Sales ..................................................................................................................................... 69
Overstated Revenue ....................................................................................................................... 70
Money Laundering .......................................................................................................................... 70
Fraud Red Flags: .................................................................................................................................. 73
Fraud Detection Procedures ............................................................................................................... 74
Legal Business Environment ................................................................................................................... 76
Consumer Protection .......................................................................................................................... 76
Product and Service Liability ............................................................................................................... 78
Debtor Protection ............................................................................................................................... 83
Society Protection and Liability of Organization ................................................................................. 85
Business Appraisal/Financial Valuation. ................................................................................................. 92