2. Trade receivables

Question 1

key assertions related to TR

Answer 1

existence & valuation (overstating assets)

Question 2

audit procedures?

Answer 2

audit confirmation
- selection criteria: long & large outstanding balances
- identify samples
- ask client prepare confirmation letters
- send to customers independently
- wait for customer to reply directly (check if its to auditor)
- replies received:
agree - xref to AWPS, conclude no exceptions noted

disagree - investigate reason for diff and perform
balance per aging xxx
add/(less) reconciling items xxx
balance per confirmation reply xxx

• no replies: alternative procedures
  vouch to subsequent receipts
  or proof to sale

& trade receivables aging
- check casting (submission adds up correctly)
- agree balance to lead sheet/TB
- verify accuracy of aging
• vouch to invoice
• check age of invoice
• check amounts are aged in correct category
- should inquire with client on paying habits of customer & vouch to subsequent collections
• for long outstanding debts, determine if adjustments are required