AUDIT II CH-3 EDITED Receivable & Sales
AUDIT II CH-3 EDITED Receivable & Sales
All sales, cash receipts sales adjustments that Accounts receivable include all
Completeness occurred during the period have been claims on customers at the balance
recorded. sheet date.
The entity has rights to the receivables and Accounts receivable at the balance
Rights and cash resulting from sales transactions. sheet date represents legal claims of
Obligations the entity.
Valuation All sales, cash receipts and sales adjustments Accounts receivable represent gross
transactions are correctly journalized, claims, On customers at the balance
summarized, and posted. sheet date. The allowance for
uncollectible accounts represent a
reasonable estimate.
BY: Birhanu F. (MA. in Public Financial Management) 18
Presentation The details of sales, cash receipts and sales Accounts receivables are properly
3.4 Audit Program for Receivable/Sales (Receivables Audit Steps)
(I) Internal Control considerations- Tests of Controls
Perform following tests of controls.
a. Examine significant aspects of a sample of sales transactions.
b. Compare a sample of shipping documents to related sales
invoices.
c. Review the use and authorization of credit memoranda.
d. Reconcile selected cash register tapes and sales tickets with sales
journals.
e. Test IT application controls.
f. Examine evidence of review and approval of revenue estimates.
BY: Birhanu F. (MA. in Public Financial Management) 19
(II)Substantive Audit Procedures for Receivable/Sales
Perform following major Substantive procedures for receivables and
revenue.
1. Obtain an aged trial balance of trade accounts receivable and
analyses of other accounts receivable and reconcile to ledgers.
2. Obtain analyses of notes receivable and related interest. (Accuracy)
3. Inspect notes on hand and confirm those with holders(existence, occurrence
& right)