How to deal with audit adjusting entries

How to deal with audit adjusting entries

Audit adjusting entries generally analyze the statement as a whole, to determine the debit and credit sides of the entry, what is overcounted by the opposite direction of the corresponding offset what, on the contrary, undercounted on the increase. Examples.

(a), "less complementary"." Less make up" is the method of additional adjustments for the audited unit's underreported items.

[Example 1] A certified public accountant in the audit process found that the audited unit has a purchase of raw materials owed 2 million yuan has not been recorded.

Borrow: inventory - raw materials 2000000

Credit: accounts payable 2000000

The subject of the adjusting table using the name of the statement of the project as an audit of the adjusting entries of the subject, in practice, because a statement of accounts project usually have more than one misstatement, in order to clearly identify, in the working papers generally need to set out the details of the subject. For example, "inventory", in the work of the draft will need to distinguish between raw materials, products, production costs and other line items.

(ii), "more against"." More credit" and "less make up" the opposite situation, for overstated or fictitious items by debit and credit to adjust the method.

[Example 2] CPA implementation of the letter found that the audited unit recorded to a unit of sales receivables of 1 million dollars does not exist.

This is a fictitious sales transaction, you can first list the audited entity's accounting treatment, and then reverse the debit and credit offset.

① audited unit entry:

borrow: accounts receivable 1000000

credit: income from main business 1000000

② audit adjustments entry:

borrow: income from main business 1000000

credit: accounts receivable 1000000

(c), "more than offset less make up". This situation is not a simple misstatement of the audited unit or concealment, the need for certified public accountants through the comparison of positive and negative, overcounted items and amounts offset, undercounted items and amounts "to make up" on.

[Example 3]CPA audit found that the audited entity will be an advertising costs 500,000 yuan charged to administrative expenses.

①List the audited unit's entry:

Borrow: administrative expenses 500000

Credit: bank deposits 500000

②List the correct entry:

Borrow: operating expenses 500000

Credit: bank deposits 500000

Through the above adjustments to see that, audited The above adjustments show that the audited unit over-accounting for 500,000 yuan of administrative expenses, under-accounting for 500,000 yuan of operating expenses, through the "more than offsetting" to get the audit adjustments:

Borrow: 500,000 yuan of operating expenses

Credit: 500,000 yuan of operating expenses

Audit adjustments and accounting adjustments, the difference between the difference is what?

Audit adjusting entry is the auditor of the audit process, affecting the audit of the fair reflection of the accounting statements of the audit differences in the adjustment, belong to the scope of audit adjustments, including proposed adjustments to the discrepancies, unadjusted discrepancies and reclassification errors. For example, reclassification error means that there is no misstatement in accounting, but the balance sheet classification prepared is not in accordance with the provisions of the Enterprise Accounting System, such as long-term borrowings due within one year have not been categorized under the item "long-term liabilities due within one year" in the current liability account. Such errors belong to the scope of audit adjustments, but because the audited unit is not required to adjust the books of account, so does not belong to the scope of accounting adjustments. Another example, a customer's accounts receivable for another customer's accounts receivable ledger, which belongs to the scope of accounting adjustments, but the error does not affect the balance of accounts receivable, does not affect the fairness of the accounting statements, and therefore does not belong to the scope of the audit adjustments.

On how to deal with the problem of audit adjustments, the article gives an example to explain. The main thing is to grasp the treatment of more than offsetting less than making up. In addition, audit adjustments and accounting adjustments which are different, we should pay attention to the distinction in the study of accounting, do not confuse. I hope that the content of this article can help you.