Some substantive analytical procedures for revenue and accounts receivable (EMGP: Table 10-9) •Comparison of revenues with units shipped or production levels •Analysis of daily or weekly revenues around year-end •Comparison with previous year’s and/or industry:–revenue and gross profit percentage by product –receivable turnover and days outstanding –allowance for uncollectible accounts as a percentage of accounts receivable –bad debt expense as a percentage of credit sales –sales returns as a percentage of revenue 5
Substantive tests of revenue transactions (EMGP: Table 10-10) Assertions Audit Procedures Occurrence For a sample of sales transactions recorded in the sales journal, vouch the sales invoices back to customer orders and shipping documents. Completeness Trace a sample of shipping documents to the details of the sales invoices and to the sales journal and customers’ accounts receivable subsidiary ledger. Accuracy Compare prices and terms on a sample of sales invoices with authorized price list and terms of trade Cut-off Compare the dates on a sample of sales invoices with the dates of shipment and with the dates they are recorded in the sales journal. Classification Examine a sample of sales invoices for proper classification into revenue accounts 6
Substantive tests of account receivable balances (EMGP: Table 10-10) Assertions Audit Procedures Existence •Confirmation of selected accounts receivable.
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- Spring '15
- Financial audit, substantive tests, Substantive Analytical Procedures