audit procedures, receivables

Question 1

What does the audit of receivables focus on?

Answer 1

Ensuring recorded balances are complete, accurate, recorded in the correct period (cut-off), and assessing the likelihood of payment.

Question 2

How can analytical procedures assist in auditing receivables?

Answer 2

Sales and receivables are part of the same cycle, so analyzing the receivables collection period can help identify potential misstatements.

Question 3

What are common sources of information for receivables audit procedures?

Answer 3

Receivables ledger data
Aged debt schedule
Direct confirmations with customers
Cash payments received after year-end
Board minutes
Media/industry coverage
Invoices/credit notes.

Question 4

How does the auditor verify Valuation for receivables?

Answer 4

For a sample of receivables, inspect post year-end bank statements for cash received from customers.

Discuss the allowance for doubtful debts with client management.

Review the aged receivables list and investigate overdue balances.

Evaluate the reasonableness of assumptions and reperform calculations if needed.

Question 4

What is the procedure to verify Existence and Rights and Obligations for receivables?

Answer 4

Obtain direct confirmation of receivables balances from customers.

Question 5

How can receivables collection period calculations help in the audit of receivables?

Answer 5

They can identify potential misstatements by highlighting unusually long collection periods.