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LESSON _10 - balances or if errors are anticipated because...

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10-6 (1) each credit memorandum should be approved by someone other than the individual who initiated it and (2) a credit for returned goods should be supported by a receiving document indicating that the goods have been returned. 10-10 A positive accounts receivable confirmation requests that the customer indicate whether or not it is in agreement with the amount due to the client stated in the confirmation. Thus, a response is required regardless of whether the customer believes that the amount is correct or incorrect. A negative confirmation requests that the customer respond only when it disagrees with the amount due to the client. Positive confirmations are generally used when an account contains large individual
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Unformatted text preview: balances or if errors are anticipated because control risk was judged to be high. Negative confirmation requests are used when there are a large number of accounts with small balances, control risk is assessed to be low, and the auditor believes that the customers will devote adequate attention to the confirmation. 10-27 In addition to sending second requests, Signoff-on can perform the following audit procedures: • Examination of subsequent cash receipts. • Examination of the customer orders, shipping documents, and duplicate sales invoices. • Examination of other client documentation. 10-12 C 10-13 B 10-14 B 10-15 D 10-16 C 10-17 B 10-18 A 10-19 A 10-20 C 10-21 A 10-22 A 10-23 B...
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