Beruflich Dokumente
Kultur Dokumente
Receivable
Company Balance Sheet Date
The company has the following general ledger accounts that are classified in the accounts, notes,
or other receivables captions of the balance sheet:
General
Ledger Description or Brief Purpose Current or
Number of the Account Noncurrent Asset?
AUDIT OBJECTIVES
¯ Meet with the client before the balance sheet date and arrange
for a duplicate copy of the trial balance for your workpapers.
¯ If the aged trial balance is computer generated, consider using
computer audit software (such as IDEAtor ACLt) to test the
mechanical accuracy.
¯ If the client uses packaged accounting software and the auditor
has determined that the client is unable to make changes to
program coding, testing the mechanical accuracy of the accounts
receivable trial balance may not be necessary. If procedures are
performed to test mechanical accuracy in this situation, they may
be limited.
¯ If the listing is manually prepared, instruct the client to identify
each customer and account number on the aging and to leave
adequate space to record subsequent collections. Stress the
importance of clarity and neatness in preparing the schedule as it
will be the primary worksheet.
¯ Utilize client employees whenever possible to reduce the time
required to test clerical accuracy. For example, for long reports,
remove several pages and have the client foot the remaining pages,
then add your page totals. Also, avoid footing all the columns on
the trial balance. Instead, foot two columns and crossfoot the total
line.
* 2. Review the aged trial balance to determine if there are
natural groups within the total population of accounts. See
paragraphs 401.5 and 401.10 for guidance.
Practical Considerations:
¯¯ Year-end cutoff.
¯¯ Write-offs.
¯¯ Imputed interest.
¯¯ Analytical procedures.
¯¯ Transfers of receivables.
¯¯ Cash receipts.
¯ Practitioners may refer to PPC’s Guide to Fraud Investigations
for more extensive fraud detection procedures if it is suspected that
the financial statements are materially misstated due to fraud.
* 13. Consider whether procedures performed are adequate to
respond to identified fraud risk factors. If fraud risk factors or other
conditions are identified that require an additional audit response,
consider those risk factors or conditions and the auditor’s response
in connection with the performance of Step 11 in AP-1b.
Practical Consideration:
Year-end Cutoff
A, [B] Test the year-end cutoff procedures for sales to determine if
receivables are recorded in the appropriate period.
a. Scan the sales journals for one month before and after year
end. Investigate any unusual entries.
b. Review the journal for sales returns and credit memos for
two months before and after year end. Investigate any unusual
entries.
Write-offs
C Select individual accounts that were written off during the audit
period. Determine that the entries were properly approved by the
owner/manager. Document the items tested.
Practical Consideration:
Imputed Interest
A, E Review accounts and notes receivable to determine if any interest
should be imputed for significant balances that are due in excess of
one year from the balance sheet date. Also consider proper balance
sheet classification of such receivables.
Practical Consideration:
¯ Extended term accounts receivable are rare but can arise when
a company establishes payment terms for its trade accounts
receivable based on a poor economy or difficulty with some key
customers. Normally, this type of interest should not be accrued,
but instead be recognized on a cash basis.
Analytical Procedures
[A],[B], Apply analytical procedures to accounts receivable by determining
[C] the following and comparing to percentages maintained in the
permanent audit file:
a. Trade receivables divided by current assets.
¯¯ The company’s total assets are less than $100 million on the
date of the financial statements.
Transfers of Receivables
D, E If the company has transferred receivables to a third party,
determine whether the transaction has been accounted for in
accordance with SFAS No. 140.
Practical Considerations:
Cash Receipts
* If the auditor, based on his or her consideration of fraud risk
factors, decides to modify procedures related to customer cash
receipts, consider performing a proof of cash (see additional
procedures at AP-2). In addition, consider verifying the following:
a. The dates of cash receipts and deposit tickets are identical.
b. The total amounts on the daily cash receipts list and daily
deposit slips agree.
c. The customer’s name and deposit amounts should be the
same on the daily cash receipts journal and the subsidiary ledger.
d. Deposit slip totals are accurate.
e. Review customer complaints.
f. Search for write-offs that are unusual, such as write-offs of
balances due from continuing customers.
g. Review credit memos.
Practical Consideration: