How to audit revenue in Statutory Audit?

An audit of revenue typically involves the examination of a company's financial records to ensure that the revenue reported on the company's financial statements is accurate and in compliance with generally accepted accounting principles (GAAP). The process typically includes the following steps:

1. Planning: The auditor will begin by understanding the company's operations and the systems in place for recording revenue (also called as walk through or understanding of the process flow). They will also identify any areas of risk that may require additional attention during the audit (also called as RCM or Risk control matrix).
2. Testing of controls: The auditor will evaluate the effectiveness of the company's internal controls over revenue risk identified in step 1. This includes testing the controls that are in place to ensure that revenue is recorded accurately and in compliance with GAAP.
3. Substantive testing: The auditor will perform substantive testing of the revenue transactions. This includes testing the completeness, accuracy, and validity of the revenue transactions.
4. Analytical procedures: The auditor will use analytical procedures to identify any unusual or unexpected trends in the revenue data. This may include comparing the company's revenue data to industry averages or prior period data.
5. Communicating with management: The auditor will communicate with management throughout the audit process to discuss any issues or concerns that arise. This may include discussing any adjustments that need to be made to the revenue data.
6. Finalizing the audit: After the above steps are completed, the auditor will prepare a report outlining their findings and any recommendations for improving the company's financial reporting process.

You can also go through Master Blaster of Statutory Audit course to learn these things in detail. It's worth noting that this is a high-level overview and audit process may vary depending on complexity and size of the company and industry.

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