Accounts receivable audit program

Condition of goods should also be checked. Cash from one receivable is stolen and covered with cash received from a second customer during the following day or two. Old accounts are turned over to a collection department. Transactions occurring before the end of year could be recorded in the subsequent period thus, reporting for the initial year is not complete.

If balance still proves to be uncollectible, both collection and accounts receivable departments file documentation to indicate actions taken. Lapping is being carried out.

Method of estimating bad debt expense should be examined. May be by mail or over telephone or given directly to company employees. Thought this is not only useful for a junior auditors, but also a basic clue to the accountant [particularly the accounts receivables accountant or custodians] to avoid any unnecessary mistakes in accounting the accounts receivable and revenues that could lead to a long auditing drains.

Entries are accumulated and forwarded to general accounting department for posting of the overall reduction of Inventory account. They are also required in final review stage of audit as a last check.

Substantive Testing Procedures for Accounts Receivable Balances A number of substantive testing procedures should be performed to verify the assertions made by client about accounts receivable and related balances: On a pre-printed, pre-numbered sales order form, the sales department lists all relevant information: Periodically, an aged accounts receivable trial balance is prepared which lists each account by age.

Use as a substantive test of an account balance is optional. Analytical procedures are required in planning stage of audit to help assess inherent risk. Auditor must ensure balance sheet presentation and disclosure is appropriate. Whenever auditor starts with transactions at their inception, the completeness assertion is being tested.

Normally used for old balances, large balances, or where risk is high. It is done by unethical custodians by writing off the receivable as a bad debt. Credit department reviews credit file which can hold credit report, references, financial statements, payment history of client, etc. A customer order is received.

Verify that aged accounts receivable trial balance is added correctly and individual amounts agree with master file. If approved, sales order goes to finished goods warehouse where goods are gathered and sent to shipping department. Because an actual response should be received in all cases, this is viewed as a better technique.

Normally used for small balances, balances that are not old, and where risk appears low.

Accounts Receivable Audit

Shipping department sends goods to customer and prepares a shipping document, often known as a bill of lading. Transactions after the end of year could be recorded prematurely in the initial year reported transactions in initial year did not actually exist at the time of the financial statements.AUDIT PROGRAM FOR ACCOUNTS RECEIVABLE Risks The accounts receivable listing or individual balances may be inaccurate Accounts.

receivable balances may not exist Accounts receivable may not be collectible Bad debts write-offs may not be valid Sales transactions may be processed in the wrong period Steps 1.

Here are some of the accounts receivable audit procedures that they may follow: Trace receivable report to general ledger.

The auditors will ask for a period-end accounts receivable aging report, from which they trace the grand total to the amount in the accounts receivable account in the general ledger.

In auditing accounts receivable and related revenue balances, several potential problems exist that could create material misstatements.

Some of these would be errors whereas others would indicate fraud. A set of basic internal control should be in place to prevent such erroneous or frauds from happening and a serial of substantive test to be. Audit Program for Accounts Receivable and Sales for accounts receivable and sales.

Modification to the auditing procedures listed below may be necessary in order to achieve the audit objectives. [Note: Transfer of receivables is not addressed in this audit program, as this type of transaction is not currently engaged in Mongolia.

Obtain Aged Schedule of Accounts Receivable The auditor should obtain an aged schedule of accounts receivable as of the confirmation date. He or she should apply the following procedures to this schedule: Determine that totals are correct.

Subject: Audit of Accounts Receivable We conducted an audit of Accounts Receivable for the period from July 1, through December 31, Our audit objectives were to determine whether there were adequate controls and procedures in place to ensure that accounts receivables are properly recorded, related allowances for doubtful accounts .

Accounts receivable audit program
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