You are conducting an audit on your client's revenue cycle for the 2019 financial year. Your client is a medical device distributor company. One of the policies of the client is that they sell to customers on credit by providing a payment period of 30 days. If the customer pays on time, a 3% discount is given. Clients receive payments from customers in the form of cash payments to cashiers or collectors, transfers to the client's company bank account, and payments via checks, and post-dated checks. Based on this policy you perform a risk assessment. Explain the risk of fraud or misstatement that can arise!
You are conducting an audit on your client's revenue cycle for the 2019 financial year. Your client is a medical device distributor company. One of the policies of the client is that they sell to customers on credit by providing a payment period of 30 days. If the customer pays on time, a 3% discount is given. Clients receive payments from customers in the form of cash payments to cashiers or collectors, transfers to the client's company bank account, and payments via checks, and post-dated checks. Based on this policy you perform a risk assessment. Explain the risk of fraud or misstatement that can arise!
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 33P
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You are conducting an audit on your client's revenue cycle for the 2019 financial year. Your client is a medical device distributor company. One of the policies of the client is that they sell to customers on credit by providing a payment period of 30 days. If the customer pays on time, a 3% discount is given. Clients receive payments from customers in the form of cash payments to cashiers or collectors, transfers to the client's company bank account, and payments via checks, and post-dated checks. Based on this policy you perform a risk assessment. Explain the risk of fraud or misstatement that can arise!
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