12-31-09 (Prepared by client) Confirmation Subsequent Customer Current 30-60 60-90 Over Total Mailed Collection Comments by Credit 1-30 days Days Days 90 Days Manager-- Alpha Aroma 1150 900 2050 2050 2050 Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance. Anne Charlotte Cosmetics 30900 1450 32350 0 32350 Confirmation mailed by customer is correct. Client's AR balance is incorrect. Anne Charlotte has already paid the amount outstanding at the end of 2009 of $32,350. Bobell Beauty Supplies 1460 1460 1460 0 AR balance is correct. Body Bar 2100 800 1050 3950 3950 1850 Customer did not report any error in outstanding AR balance despite it already paying a portion of the outstanding AR balance. Capital Odors 1200 1200 1200 0 AR balance is correct. Cut-Rate Discount Stores 2380 1720 400 4500 4500 1800 Customer did not report any error in outstanding AR balance despite it already paying a portion of the outstanding AR balance. Darings 35500 7600 43100 7100 36000 Confirmation mailed by customer is correct. Client's AR balance is incorrect. Darings has already paid $36,000, leaving only $7,100 amount of AR outstanding. Frankies Floral Frag. 20400 20400 20400 0 Confirmation mailed by customer is correct. And client's balance of AR is also correct. Incense, Inc. 6300 600 6900 6900 6000 Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance. Janis Department Stores 4600 1150 5750 5750 5200 Customer did not report any error in outstanding AR balance despite it already paying a portion of the outstanding AR balance. Lone Star Supply 3290 3290 3290 3290 Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance. Rausch's Dept. Store 2700 1250 3950 3950 3950 Customer did not report any error in outstanding AR balance despite it already paying all the outstanding AR balance. Tears and Doefall Co. 75450 75450 75450 70000 Confirmation mailed by customer and client's AR balance are both incorrect. Customer has already paid $70,000, leaving only $5,450 amount of AR outstanding. William's Fragrances 1850 1850 1850 0 AR balance is correct. Young and Beautiful 24350 24350 6350 18000 Confirmation mailed by customer is correct. Client's AR balance is incorrect. Customer has already paid $18,000, leaving only $6.350 amount of AR outstanding. Various Other Acct's. 4830 4830 4830 0 AR balance is correct. Per client 211200 20380 2600 1200 235380 149030 180490 AUDIT PROGRAM Generalized Evidence- Substantive Tests of No. Audit Objectives Potential Risks / Errors Gathering Audit Transactions Procedures 1 Existence or - Occurence of unauthorized sales transactions - Sales figures and - Account for a sequence of Occurrence (All of the - Occurence of unauthorized write-offs account of receivables receivable sales invoices recorded account examination, after that - Review sales journal and receivable transactions match them with source master file for unusual exist) documents (Vouching) transactions and amounts - Pick a sample of source - Trace sales journal entries to documents and trace supporting documents, including forward to verifiy that the bill of lading, duplicate sales transactions related to invoice, sales order, and accounts receivable exist customer order (Tracing) - Observe suprise count - Computation of sales and receivables amounts and ratio analysis (Analytical Procedures) - Send confirmation letter to related customers (Positive and Negative Confrmation) 2 Completeness (All - Goods may have been shipped but- not Send billed confirmation to the customer letter Trace selected shipping account receivable is - Sales may have been billed to the customer to related but customers not shipped documents to the sales journal to included in the balance - Merchandise may have been sold to (Confirmation) customers who were badensure credit that risksevery transaction is sheet) - Account receivable included figure and sales examination (Vouching) - Contact the related customers (Verbal Inquiry) - Pick a sample of related source documents (e.g. delivery order, shipping notice) and compare it to master file (Tracing) - Cut-off test (sales register and shipping records) 3 Rights and Obligations Sales may have been recorded in - Take a sample of - Compare date of recording of (The accounts the wrong fiscal year related source sale in sales journal with receivable are bona documents (e.g. delivery duplicate sales invoice and bill of fide claims owed the order, shipping notice) lading company) and compare it to master - Foot and cross-foot the sales file (Tracing) journal and trace totals to the - Compare sales and general ledger accounts receivable - Trace a sample of sales figures with prior years invoices from sales journal to (Analytical Procedures) accounts receivable master file - Check whether there and test for amount, date, and are any goods in invoice number consignment - Pledge any collateral goods 4 Valuation or Allocation Having incorrect recorded sales amount - Perform recalculation of - Trace entries in sales journal to sales invoices (The accounts sales transactions on - Recompute prices on sales invoices receivable are aging receivable collectible in the (Recalculation) normal course of - Compare the business) recalculation result with sales figure (Analytical Procedures)
5 Presentation and Sales may have been posted to the -wrong
Review account of account Examine duplicate sales invoice for appropriate account classification Disclosure (Pledged receivable figures to accounts receivable or ensure that they are accounts receivable properly classified used as collateral are (Scanning) disclosed and - Disclose any Receivables from troublesome collectability directors, officers, and affiliates are separately disclosed)