Professional Documents
Culture Documents
I. Analytical Procedures
II. Designing Tests of Details of Balances
III. Confirmation of Accounts Receivable
IV. Sample Audit Program
I. Analytical Procedures for Accounts
Receivable
The understatement of
sales and accounts
receivable is best
uncovered by
substantive tests of
transactions for
shipments made but
not recorded, and by
analytical procedures.
D. Accuracy of Accounts Receivable
Confirmation of individual
customer accounts is the
most common test of
details for balances for
accounts receivable.
Supporting documentation
for shipments and cash
receipts can also be
examined to support
individual entries to
customer accounts.
E. Proper Classification of Accounts
Receivable
The aged trial balance can
be reviewed for material
receivables from affiliates,
officers, directors, and
other related parties. Such
balances often require
segregation from accounts
receivable and disclosure.
Significant credit balances
in accounts receivable
should be reclassified as
accounts payable.
F. Correct Cutoff of Sales and Receivables
Tolerable misstatement
Inherent risk
Control risk
Achieved detection risk from other procedures
Type of confirmation (negative form requires
more confirmations)
IV. Sample Audit Program