CPA · Question 34 · Area II: Risk Assessment
Scenario: An auditor is auditing the revenue cycle of a software company (Issuer). The company recognizes revenue from multi-year software licenses. The auditor identifies a risk that revenue might be recognized upfront rather than ratably over the license term. <br/><br/>Which of the following controls would BEST address this risk?
Answer options:
Sales managers review monthly sales reports for accuracy.
The IT system automatically amortizes revenue based on the contract start and end dates entered, and the system configuration is tested periodically.
The CFO signs off on all contracts over $1 million.
The company maintains a manual spreadsheet reconciling billings to revenue.
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