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Audit Procedure For Account Receivables

The document provides a process flow diagram for auditing receivables. The diagram shows the key steps in auditing for rights and obligations, occurrence, completeness, existence, valuation and allocation, accuracy, and classification and understandability. The steps include reviewing bank confirmations for liens, agreeing balances to listings, examining customer accounts, testing discounts, following up on confirmation disagreements, and reviewing disclosure notes. The goal is to identify potential misstatements in receivables.

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Devine Grace A. Maghinay
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151 views

Audit Procedure For Account Receivables

The document provides a process flow diagram for auditing receivables. The diagram shows the key steps in auditing for rights and obligations, occurrence, completeness, existence, valuation and allocation, accuracy, and classification and understandability. The steps include reviewing bank confirmations for liens, agreeing balances to listings, examining customer accounts, testing discounts, following up on confirmation disagreements, and reviewing disclosure notes. The goal is to identify potential misstatements in receivables.

Uploaded by

Devine Grace A. Maghinay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Devine Grace A.

Maghinay

Process Flow Diagram: Create a diagram of an audit procedure of Receivables, while taking note of the possible potential misstatements
in the process of Receivables audit.

Audit
Procedure of
Receivables

Rights and Classification &


Occurrence Completeness Existence Valuation and Accuracy
Obligations Understandability
Allocation

Review bank confirmation Match the total of the Compare receivables’ Review the aged analysis of
for any liens on receivables. receivables’ listing to the turnover and receivables’ receivables for any large
sales and ledgers control days to the previous year credits, non-trade
account. and/or to industry data. receivables and long-term
Make inquiries of receivables and consider
management, review loan whether such items require
Agree the balance from the Review the adequacy of separate disclosure
agreements and review
individual sales ledger the allowance for
board minutes for any
accounts to the aged uncollectable accounts
evidence of receivables
receivables’ listing and vice through discussion with
being sold Read the disclosure notes
versa. management.
relevant to receivables in
the draft financial
statements and review for
understandability.

For a sample of sales Examine the customer’s Test whether discounts have
transactions recorded in the account and customer been properly applied by
ledger, vouch the sales correspondence to assess recalculating them for a
invoice back to customer whether the balance sample on invoices.
orders and dispatch outstanding represents
documentation. specific invoices and
confirm their validity For a sample of sales
invoices, compare the
prices and terms to the
authorized price list and
Follow up all the balance terms of trade
disagreements and non- documentation.
replies to the receivables’
confirmation.

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