Requirements for confirming accounts receivable Confirmation of accounts receivable is required by auditing standards unless certain...
Requirements for confirming accounts receivable
Confirmation of accounts receivable is required by auditing standards unless certain conditions exist. Identify the conditions that will be present in an audit that does not confirm accounts receivable.
Homework Answers
Ans : In the following situations , audit need not get external confirmation for accounts receivables.
1. The overall account balance is immaterial
2. External confirmation procedures for accounts receivable would be ineffective.
3. The auditor’s assessed level of risk of material misstatement at the relevant assertion level is low, and the other planned substantive procedures address the assessed risk. In many situations, the use of external confirmation procedures for accounts receivable and the performance of other substantive procedures are necessary to reduce the assessed risk of material misstatement to an acceptably low level.
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Requirements for confirming accounts
receivable
Confirmation of accounts receivable is required by auditing
standards unless certain...
Confirmation of accounts receivable is presumptively mandatory audit procedure. In performing this procedure, auditors use positive...
Confirmation of accounts receivable is presumptively mandatory audit procedure. In performing this procedure, auditors use positive confirmation requests or negative confirmation requests or a combination of both. Which confirmation provides auditors with more accurate assurance, and why? (2 marks) B. Describe two conditions which should exist for the auditors to use the negative form of request. (4 marks) C. If a response is not received to an initial positive confirmation request, describe two actions that should be taken by the...
In auditing accounts receivable, the “negative” form of confirmation request most likely would be used...
In auditing accounts receivable, the “negative” form of confirmation request most likely would be used when a. Accounts receivable consist of a number of accounts with large customer balances. b. Control Risk and Inherent Risk are assessed to be High. c. Recipients are likely to return positive confirmation requests without verifying the accuracy of the information. d. The auditor is not aware of circumstances or conditions that would cause recipients of negative confirmation...
Evaluate and discuss the following statement: "In many audits in which accounts receivable is material, the...
Evaluate and discuss the following statement: "In many audits in which accounts receivable is material, the requirements of confirming customer balances is a waste of time and would not be performed by competent auditors if it were not required by auditing standards. When internal controls are excellent and there are a large number of small receivables from customers who do not recognize the functions of confirmation, it is a meaningless procedure. Examples include well-run utilities and retail stores. In these...
Imagine that you were auditing accounts receivable balances to confirm sales and found significant discrepancies between...
Imagine that you were auditing accounts receivable balances to confirm sales and found significant discrepancies between the recorded account balances and returned confirmations from customers. Recommend an alternative approach to confirming sales revenue. Provide rationale for your recommendation.
"Accounting Irregularities" Please respond to the following: Imagine that you were auditing accounts receivable balances to confirm...
"Accounting Irregularities" Please respond to the following: Imagine that you were auditing accounts receivable balances to confirm sales and found significant discrepancies between the recorded account balances and returned confirmations from customers. Recommend an alternative approach to confirming sales revenue. Provide rationale for your recommendation. Using the case as a reference and from the e-Activity, discuss the improper recognition treatment you researched, and make a recommendation regarding the type of analytical procedure that should have detected the improper accounting transactions. Propose...
Can you answer these questions? Thank you 13. cd so Generally Accepted Auditing Standards (GAAS) and...
Can you answer these questions? Thank you
13. cd so Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as: a. ideals to work towards, but which are not achievable. maximum standards that denote excellent work. c. minimum standards of performance that must be achieved on each audit engagement. benchmarks to be used on all audits, reviews, and compilations. 14. The auditor's judgment concerning the overall fairness of presentation of financial position,...
Part Ill Case Studies (20 points) Accounts Receivable - Alternative I Case Study Facts: able Your...
Part Ill Case Studies (20 points) Accounts Receivable - Alternative I Case Study Facts: able Your audit team is meeting in early September, 2019 to plan the audit of a distributor as of December 31, 2019. The team is about to plan the audit of accounts receivable, a very material amount on the client's balance sheet. The team: Sets Audit Risk as low Assesses Inherent Risk as high Assesses Control Risk as high Derives Detection Risk as low Will not...
Sikon & Spiros CPAs, was auditing D'Alessandro Industries, Inc. Sikon & Spiros sent positive accounts receivable...
Sikon & Spiros CPAs, was auditing D'Alessandro Industries, Inc. Sikon & Spiros sent positive accounts receivable confirmations to a number of D'Alessandro's government customers. They received a number of return confirmations marked "We do not confirm balances because we are on a voucher system." Required: a. List alternative procedures that Sikon & Spiros might use to ensure the validity of these accounts. b. Assuming all the procedures you list are viable optons for the D'Alessandro audit, which procedures do you...
It’s Audit related. The confirmation paper are in order. Your help is greatly appreciated, thank you...
It’s Audit related. The confirmation paper are in order. Your
help is greatly appreciated, thank you very much!!
PS: this assignment is due in a few hours.
Accounts Receivable Confirmations You work at the accounting firm of Willis & Adams and have been asked to complete the test of details on accounts receivable for the 2014 audit of Earth Wear Clothiers, Inc. (the audit client). The primary test involves sending confirmations to customers so that they can confirm the amount...
15 Assume that you have selected the following nonstatistical sample for selecting accounts receivable for confirmation....
15 Assume that you have selected the following nonstatistical sample for selecting accounts receivable for confirmation. The total book value of the population is $9,000,000, and tolerable misstatement is $350,000. You have decided to audit every item over $50,000 and randomly select items in two groups under $50,000, as the following shows. You selected the following sample. Stratum N n a) >$50,000 b) 50,000>X>4,999 c) <5,000 20 100 300 20 30 30 Book Value of Stratum $3,000,000 3,000,000 3,000,000 9,000,000...
Confirmation of accounts receivable is presumptively mandatory audit procedure. In performing this procedure, auditors use positive confirmation requests or negative confirmation requests or a combination of both. Which confirmation provides auditors with more accurate assurance, and why? (2 marks) B. Describe two conditions which should exist for the auditors to use the negative form of request. (4 marks) C. If a response is not received to an initial positive confirmation request, describe two actions that should be taken by the...
Can you answer these questions? Thank you
13. cd so Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as: a. ideals to work towards, but which are not achievable. maximum standards that denote excellent work. c. minimum standards of performance that must be achieved on each audit engagement. benchmarks to be used on all audits, reviews, and compilations. 14. The auditor's judgment concerning the overall fairness of presentation of financial position,...
Part Ill Case Studies (20 points) Accounts Receivable - Alternative I Case Study Facts: able Your audit team is meeting in early September, 2019 to plan the audit of a distributor as of December 31, 2019. The team is about to plan the audit of accounts receivable, a very material amount on the client's balance sheet. The team: Sets Audit Risk as low Assesses Inherent Risk as high Assesses Control Risk as high Derives Detection Risk as low Will not...
It’s Audit related. The confirmation paper are in order. Your
help is greatly appreciated, thank you very much!!
PS: this assignment is due in a few hours.
Accounts Receivable Confirmations You work at the accounting firm of Willis & Adams and have been asked to complete the test of details on accounts receivable for the 2014 audit of Earth Wear Clothiers, Inc. (the audit client). The primary test involves sending confirmations to customers so that they can confirm the amount...
15 Assume that you have selected the following nonstatistical sample for selecting accounts receivable for confirmation. The total book value of the population is $9,000,000, and tolerable misstatement is $350,000. You have decided to audit every item over $50,000 and randomly select items in two groups under $50,000, as the following shows. You selected the following sample. Stratum N n a) >$50,000 b) 50,000>X>4,999 c) <5,000 20 100 300 20 30 30 Book Value of Stratum $3,000,000 3,000,000 3,000,000 9,000,000...
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