Revenue trace to source

What it does

Traces selected revenue from the general ledger out to its invoice, contract or order, delivery evidence, and cash receipt — and states the direction and the assertion on the face of the workpaper.

That last part is the point, because the two directions test different things and are constantly confused. GL → source — this skill — tests occurrence and existence: does recorded revenue represent a real transaction, at the right amount, in the right period? It finds fictitious and overstated revenue. Source → GL tests completeness, and finds unrecorded revenue and skimming.

Tracing from the ledger cannot detect unrecorded revenue, because unrecorded revenue is not in the population you sampled from. If completeness is the concern, this is the wrong procedure, and the workpaper says so rather than implying coverage it does not have.

What it proves

An item is not "tested" until the evidence exists. No clean workpaper when:

• A required evidence link is missing — each selection needs the invoice, the contract or order, and the cash receipt, or an explicit documented reason why one does not apply. Concluding "agreed" with a blank evidence field is rejected.
• Amounts disagree across the chain — GL amount, invoice amount, contract-derived amount (price × quantity), and cash received must agree or carry a named difference.
• The population does not tie to GL revenue — you supply the total. Testing a filtered extract proves nothing about the account.
• A conclusion contradicts its own figures — marked agreed while a difference exists.

Subsequent-period credit memos are matched against tested revenue, which is what catches revenue recognised at period end and reversed after it.

What you get

Six tabs:

1. Workpaper Summary — the direction and assertion stated explicitly, the population tie, coverage, evidence completeness across the sample, exception counts, and the conclusion block.
2. Trace Detail — every selection with GL, invoice, contract, delivery and cash amounts and dates, each difference, the evidence score, and the disposition.
3. Exceptions — every difference and every missing link, with the dollar effect.
4. Cutoff Testing — items failing cutoff, revenue by day near period end, and the subsequent-credit-memo matches.
5. Evidence Coverage — a matrix of which links were obtained across the sample. If the sample was vouched to invoices alone, this tab makes it obvious.
6. Judgment Items — recognition questions identified but deliberately not concluded, with what would need to be determined and by whom.

Where it stops

It does not address completeness, and it says so. If unrecorded revenue is the concern, a different procedure is required.

It does not conclude on recognition. Contract terms discovered during testing that the accounting does not reflect — return rights, acceptance clauses, contingent fees, bill-and-hold — go to Judgment Items with what would need to be determined. Revenue with no cash, no receivable and no delivery evidence is escalated regardless of amount, as a description of what the documents show. Intent is never characterised.