2. Accounts receivable are stated at realisable value (realisable value). The client should perform an analysis of the collectibility of accounts receivable at the end of the year and should communicate with its customers to determine the likelihood of the collectibility of individual accounts. The auditor should keep informed of current economic conditions and consider their effect on collectibility of accounts receivable for the client. The auditor may compare cash receipts after year-end to the cash receipts of the similar period of the previous year and consider any changes as to their effect on the collectibility of the accounts receivable. 3. Transaction s are recorded in the proper period (cutoff). The client should follow a policy of holding open the books to record any returns in the subsequent period which apply to goods shipped and sales recorded in the current period. The auditor should review returns recorded in the subsequent period to determine if they apply to goods shipped and sales recorded prior to year-end. The auditor should perform an analytical test to determine whether or not returns in the first month of the next year are similar in magnitude to those experienced in the same period of previous years. 4. Existing accounts receivable are included in the aged trial balance (com- pleteness). The accounts receivable master file should be reconciled to the control account periodically by an independent person. Foot the aged trial balance and compare the total to the general ledger. Trace a sample of accounts from the master file to the aged trial balance to determine if all are included. 5. Accounts receivable exist (existence). The accounts receivable master file should be reconciled to the control account periodically by an independent person. Foot the aged trial balance and compare the total to the general ledger. Trace from the aged trial balance to the master file, looking for duplicates.
6. Accounts receivable in the aged trial balance agree with related master file amounts, and the total is correctly added and agrees with the general ledger (detail tie-in). The client should foot the trial balance and reconcile the total to the balance in the general ledger. The auditor should foot the trial balance of accounts receivable and reconcile it to the balance per the general ledger.
- Fall '13
- invoice, master file