subject: Auditing and Assurance Services

Question:

Auditing standards require the auditor to obtain an understanding of the entity and its environment as a basis for assessing the risks of material misstatements. Business models differ across organizations and industries leading to unique business processes needed to account for transactions. While the core business functions for the sales and collection cycle are generally relevant to all organizations, the underlying business processes and related documents and records are often unique to each organization.

Required:

a) Using the eight business functions for the sales and collection cycle, briefly describe the underlying business processes related to each of the eight functions for the following organization:

I Yanbu University College majority of universities generate a significant portion of their revenue from tuition. Universities bill students in advance for classes that will be taken in an upcoming term. For full time students, most universities charged a set tuition amount after students enroll in a minimum number of courses per term. II Barn cafe coffee shop a company that sells regular and specialty coffees and teas all over the region. Customers uses cash, debit or credit cards to purchase individual drinks that served to them within minutes.

b) What documents or other source evidence would you use to test the occurrence transaction-related audit objective for sales for each of these two organizations?