Accounting Manual On Date Of Shipment And Make Inquiry About Accountants

1740 WordsJun 14, 20167 Pages
10. Study the accounting manual on date of shipment and make inquiry about accountants’ instructions to date sales. 12. Obtain client’s documentation showing the accounts receivable subsidiary total reconciled to the accounts receivable control account. Alternatively, total the subsidiary and compare the amount to the control account. 13. Obtain client’s documentation showing reconciliation of intercompany receivables and payables for sales and purchases. Alternatively, confirm balances with subsidiaries or other auditors. 14. Select a sample of credit files and trace to customers’ accounts receivable, noting extent of update for payment history. 15. Study client correspondence on investigation and collection efforts on overdue…show more content…
b. These factors will affect the reliability of confirmations: (1) The confirmation form. Some positive forms request agreement or disagreement with information stated on the form. Other positive forms, known as blank forms, request the respondent to fill in the balance or furnish other information. Negative forms request a response only if the recipient disagrees with the information stated on the request. (2) The auditor’s prior experience with this client or similar clients is also likely to affect reliability because the auditor will have prior knowledge of the expected confirmation response rates, inaccurate information on prior years’ confirmations, and misstatements identified during prior audits. (3)The nature of the information being confirmed may affect the competence of the evidence obtained as well as the response rate. For example, this client’s customers’ accounting systems may permit confirmation of individual transactions, but not account balances, or vice versa. (4)Sending the confirmation requests to the proper respondents will likely provide meaningful and competent evidence. Each request should be sent to a person the auditor believes is knowledgeable about the information to be confirmed. c. The nature of the alternative procedures the auditor can apply when replies to positive confirmation requests are
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