Audit and Accounting Guide

Chapter 2 General Auditing Considerations

Notice to Readers

This chapter of the guide begins with an overview of some important audit considerations in the context of the five-step process of FASB Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. A section entitled "General Audit Considerations Over Revenue Recognition" relates broad auditing guidance that may have relevance under either FASB ASC 605, Revenue Recognition, or FASB ASC 606. The chapter then goes through the audit process as it relates to FASB ASC 606, noting relevant audit considerations at the risk assessment, performance, and evaluation phases of the audit. An initial review of this chapter’s entries in the table of contents may help the auditor more specifically identify topics of interest. Some topics that have importance during different phases of the audit, such as fraud, may be discussed in the context of each of those phases.

Introduction

2.01 This chapter helps you plan and perform your audits. Auditors¹ should consider this chapter as an aid in identifying the significant auditing considerations relevant to FASB ASC 606, Revenue from Contracts with Customers, and subsequent updates to FASB ASC 606 so that sufficient appropriate evidence is available to auditors. Note that the new standard does not apply to all revenue transactions, but only those involving contracts with customers. The information in this chapter can help you identify the risks of material misstatement ...