Module 10.pptx - Module 10 Substantiv e Tests of Receivable s and Sales By Lalaine De Jesus and Erlie Cabral \u201cMake your life a masterpiece imagine no

Module 10.pptx - Module 10 Substantiv e Tests of Receivable...

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Module 10 - Substantiv e Tests of Receivable s and Sales By: Lalaine De Jesus and Erlie Cabral
“Make your life a masterpiece, imagine no limitations on what you can be, have or do. —Brian Tracy
1. Describe the auditor’s objectives for substantive tests of trade accounts and notes receivable and sales transactions. 2. Explain the nature of the appropriate audit procedures to accomplish the objective for the audit of trade accounts and notes. 3. Understand and prepare audit working papers to document audit procedures for receivables and sales. Learning Objectives:
Audit Objectives and Procedures Mercury is the closest planet to the Sun and the smallest one in the Solar System—it’s only a bit larger than the Moon Assertions Audit Objectives Audit Procedures I. Existence II. Rights and Obligations A. To determine that receivables exist and represent bona fide obligations owed to the company as of the statement of financial position date. 1. Obtain schedule of aged trade accounts receivable and notes receivable schedule and reconcile to ledgers. 2. Confirm receivables with debtors. 3. Inspect notes on hand. 4. Perform analytical procedures to determine whether recorded sales and receivables balances appear reasonable.
Audit Objectives and Procedures Mercury is the closest planet to the Sun and the smallest one in the Solar System—it’s only a bit larger than the Moon Assertions Audit Objectives Audit Procedures III. Completeness B. To determine that all transactions relative to receivables have been recorded in the proper accounting period. 5. Test cutoff of sales and sales returns to determine whether receivables are recorded in the proper accounting period. IV. Valuation or Allocation C. To determine that receivables are recorded and presented at proper amounts in accordance with PAS/PFRS.

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