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14-30 (Substantive tests of accounts receivable) The following situations were not discovered by an inexperienced staff auditor in the audit of the Parson Company.

Sagot :

1. Several accounts were incorrectly aged in the 
client's aging schedule. 
Procedures: Compare age% to prior year AR -Analytical procedures. 
Assertion: cutoff, Valuation and allocation. 

2. The accounts receivable turnover ratio was far below 
expected results. 
Procedure: AR analytical test: AR/AP, AR turnover,etc.-Analytical procedures. 
Assertion:Completeness, cutoff. 


3. Goods billed were not shipped. 
Procedure: Cutoff test of billing-test the last month invoices. Vouching to the shipping doc.-Inspection of records. 
Assertion: Occurrence, cutoff. 

4. Some year-end sales were recorded in the wrong 
accounting period. 
Procedure: cut off test of billing-test invoices billed subsequent to year end.-Inspection of records 
assertion:Completeness, cutoff 


5. Several sales were posted for the correct amount but to 
the wrong customers in the accounts receivable ledger. 
Procedure: Confirmation of billings-Confirmation 
Assertion: Occurrence. 



6. The allowance for uncollectable accounts was 
understated. 
Procedures: Test the ratio of allowance to old AR and compare to PY. 
-Analytical procedures. 
Assertion:Valuation and allocation 

7. Several sales were entered and posted at incorrect 
amounts. 
Procedures: Confirmation of AR. -Confirmation 
Assertion: Accuracy and valuation 


8. Mathematical errors were made in totaling the accounts 
receivable ledger. 
Procedures: Foot AR aging.-Recalculation 
Assertion: Accuracy and valuation 

9. An unrecorded sale at the balance sheet date was 
collected in the next month. 
Procedure: Post subsequent cash to AR balance at YE. Reperformance. records. 
Assertion: Completeness, cutoff. 

10. Several fictitious sales were recorded. 

Procedure: Confirm customer balance.-Confirmation. 
assertion: Occrrence. 


11. The pledging of some customer accounts as security for 
a loan was not reported in the balance sheet. 
Procedure: Review security agreements.-Inspection of record. 
Assertion: Occurrence and rights and obligations. 

12. Some year-end cash receipts were recorded in the wrong 
accounting period. 
Procedure: cash cutoff testing.-Inspectionof record. 
Assertion: cutoff, occurrence, completeness. 


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