Happiness Express, Inc. Case 2.3

1241 Words5 Pages
Q1:
The primary objectives that auditors hope to accomplish by confirming a client's year-end accounts receivable is to check certain management assertions such as existence, rights and obligations, and valuation. Confirmations from clients and outside parties related to a transaction. Generally, the auditor sends to the client's customer a confirmation stating the amount owed. The customers are requested to return a statement to the auditor indicating whether they agree with the amount, or providing information about any exceptions. Confirmation from the debtor of the client is regular procedure to support existence assertion. The client's customer`s ability to pay off the debt is valuation assertion.

The primary objective for
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This procedure tests the completeness or occurrence assertions depending on the direction of the testing.
There should not be any time limit for sales cutoff test, the auditors should have monitor different transactions until they complete their audit report and if anything comes up before the audit report, they should be concerned and investigate it properly.

Q4:
There are a lot of ways that an auditor can obtain confirmations regarding accounts receivable for a client such as collection and disbursement of cash receipts. The auditor should examine or observe the cash collection of its client and the client should have system designed in a way that involves no fraudulent activity. The auditor can observe the incoming mail opened by a person who does not have access to the accounts receivable ledger. The receipts should be listed in detail with one copy and the actual receipts sent to the cashier to prepare the bank deposit, another copy sent to accounts receivable department for entry in accounts receivable subsidiary records, and a third copy sent to the accounting department for entry in the general ledger accounts receivable control account. This should be the proper cash collection process for a client, other than that, auditor should be high alert for fraud, mistake, and/or error by it's client.
Money transfer and examining shipping documents
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