Explain why it is important to understand the accounting and reporting requirements for an area that an auditor will be assigned to audit use sales and collections as an example. Briefly explain FASBs revenue recognition standard.

2. Explain the basic processes involved in generating and document revenue transactions; and in collecting for revenue transactions. You can use an example to help you explain the process. As part of your explanation, also state which documents are used to detail the revenue and collections transactions in these processes.

3. Describe the steps auditors use to test controls. Within each testing step, describe the key issues and concepts. Give an example or examples to help you explain these steps.