[Checklist] Audit of Revenue

Revenue is the gross inflow of cash, receivables, or other consideration arising in the course of the ordinary activities of an entity from the sale of goods, from the rendering of services, and from the use by others of entity resources yielding interest, royalties, and dividends. The auditor employs appropriate procedures to obtain reasonable assurance about various assertions. In carrying out an audit of revenue, the auditor is particularly concerned with obtaining sufficient appropriate audit evidence to corroborate the management’s assertions regarding the Occurrence, Completeness, Measurement, presentation, and Disclosure.

One may adopt the following checklist for Audit of Revenue:

1. Whether the system of internal control relating to revenue, to determine the nature, timing, and extent of his other audit procedures been evaluated?

2. Whether the following aspects related to internal control are appropriately review:

i. The systems and procedures relating to generation of revenue including authority to fix prices, offer discounts and other terms of sale.

ii. Accounting procedures relating to recognition of revenue.

iii. Existence of periodic reports on actual performance vis-à-vis budgets.

3. Whether the verification of revenue is carried out by employing the following procedures:

I. examination of records

ii. analytical review procedures

4. Whether the basis of recognition of revenue by the entity in accordance with the recognised accounting principles as laid down in Accounting Standard (AS) 9, Revenue Recognition?

5. Whether the entity has instituted adequate cutoff procedures in relation to sales and sale returns?

6. Whether selected despatch documents with reference to related sale invoices and the sales journal appropriately examined?

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