From the course: Building a Data-Driven Audit

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Fieldwork and revenue recognition

Fieldwork and revenue recognition

From the course: Building a Data-Driven Audit

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Fieldwork and revenue recognition

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- Revenue is the most significant component of financial performance for most organizations. Any errors can have a substantial impact on the financial statements, which could hurt the organization, but also affect the decisions made by various stakeholders. Because of the criticality of revenue, auditors must include the testing of revenue recognition controls in their audit plans to assess the risk of fraud. Auditing revenue involves examining the underlying transactions, contracts, and supporting documentation. Due to the volume and diversity of revenue transactions, auditors typically rely on sampling methods to test the completeness and accuracy of revenue recognition. However, you should be using data-driven techniques to test the full population, so you're able to flag potential risks such as unusual patterns, anomalies, or improper revenue recognition. You can achieve this by comparing current and historical trends, assessing relationships between contracts and transactions…

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