Contributed October 29, 2001 by Andre.Bracker@AOLTW.com
Accounting for Advertising Revenues
Review and validate the Company’s accounting for advertising revenues (for both standard and
non-standard advertising contracts) in accordance with Company policies and U.S. Generally
Accepted Accounting Principles (GAAP). Although we will obtain an understanding of current
advertising revenues policies, processes, and controls, our review will be primarily focused on
the financial accounting and evidential matter surrounding/supporting the Company’s historical
advertising revenue transactions.
We intend to perform extensive testing of advertising contracts and revenues initiated or
recorded during the fiscal year under review. Specifically, our test procedures will attempt to
review and validate the existence and sufficiency of internal advertising revenue reports and
other supporting documentation used by the Company to provide a basis for recording
advertising revenues. We will also review that advertising transactions are proper and have been
posted in the appropriate period.
1. Obtain advertising revenue subledgers from Accounting (and any
other key advertising revenue tracking/monitoring schedules)
covering the period under review.
2. Agree subledger totals to the general ledger and review
reconciliations for reasonableness. Obtain explanations for
significant reconciling items
3. Obtain/review divisional advertising revenue policies and
procedures and compare to U.S. GAAP. Document the results of
the review (including any suggestions for improvement) in a memo.
4. Judgmentally select all advertising transactions/partners with
aggregate advertising revenues > $$ for the period under review.
In addition, select 10 random selections < $$. For each of the
sample selections perform the following:
a) Obtain and review a copy of the final, signed contract (e.g.,
term, amount, exhibits, reporting requiremen