Receivables Confirmation

AA – L2 – SA – Q3.9 – Existence Evidence

Audit procedure for existence evidence.

Question

Which of the following audit procedures is primarily intended to provide audit evidence as to existence?

A Matching sales invoices to goods dispatch notes

B Casting the sales ledger

C Confirming receivables balances with customers

D Checking the dating of outstanding cheques

Answer

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Tags: Audit Evidence, Existence, ICAG, Receivables Confirmation
Level: Level 2

Topic: Audit and Assurance Evidence

AA – L2 – Q48 – Audit Sampling

List factors for selecting a sample of receivables for confirmation and apply them to Henley Co.'s receivables. Set out procedures for planning, performing, and following up receivables confirmation for Henley Co.

Question

The revenue of Henley Co. for the year ended 30 June 20X8 was C7.5 million, its draft profit before tax was C200,000 and its net assets C1.8 million. At that date the receivables ledger contained 140 live accounts totalling trade receivables of C1.6 million. The accounts can be broken down as follows:

Value range	Number of balances
C000	2
100-150	6
50-100	40
10-50	60
1-10	29
0-1	3
Credit balances (all less than C1,000)	140

The auditor is to use direct confirmation to confirm receivables balances.

Required
(a) List the factors which should be considered when selecting a sample of receivables for confirmation and how those factors should be applied to Henley Co.’s receivables.

(b) Set out the procedures to be performed:

(i) when planning and performing the confirmation

(ii) when following up the results.

Answer

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Tags: Audit Procedures, Audit Sampling, Follow-up Procedures, Receivables Confirmation, Trade Receivables
Level: Level 2

Topic: Audit Sampling and Other Selective Testing Procedures

Tag (SQ): Receivables Confirmation

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AA – L2 – SA – Q3.9 – Existence Evidence

Audit procedure for existence evidence.

AA – L2 – Q48 – Audit Sampling

List factors for selecting a sample of receivables for confirmation and apply them to Henley Co.'s receivables. Set out procedures for planning, performing, and following up receivables confirmation for Henley Co.

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Tag (SQ): Receivables Confirmation

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AA – L2 – SA – Q3.9 – Existence Evidence

Audit procedure for existence evidence.

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AA – L2 – Q48 – Audit Sampling

List factors for selecting a sample of receivables for confirmation and apply them to Henley Co.'s receivables. Set out procedures for planning, performing, and following up receivables confirmation for Henley Co.

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