In this month’s free video lecture from Wiley CPAexcel, Prof. Don Tidrick, PhD, CPA, CMA, CIA, of Northern Illinois University provides an excellent overview of Specific Transaction Cycles.
These concepts will be heavily tested in the Auditing (AUD) section of the CPA Exam.
Take it away Prof. Tidrick …
Transaction Cycles Overview
Transaction cycles are a group of homogeneous transactions, or similar functions.
Common transaction cycles include:
- Receipts/Revenue
- Purchasing/Expenditures
- Payroll
- Production/manufacturing inventory
- Fixed Assets (PP&E)
- Financing/investing activities
Auditors are required to obtain an understanding of internal controls and document that understanding.
As Prof. Tidrick points out, the AICPA literature states that internal controls consist of five interrelated components:
- Control Environment
- Risk Assessment
- Information and Communications Systems
- Control Activities – the above video goes into great detail on these.
- Monitoring
In just a few minutes, Prof. Tidrick offers a great way to recall what constitutes Control Activities and how the acronym of “SCARE” is a great memory aid.
In the Wiley CPAexcel CPA Review Course, this video lecture is accompanied by study text, practice questions and problem examples designed to help you quickly master transaction cycles.
