Wednesday, July 15, 2009

Audit Program for Receivables

Audit Objective: To establish the validity and collectibility of the receivables and the fairness of the description and classification of these receivables in the Balance Sheet

Analytical Review:

Compare last year’s Accounts Receivable with the current period receivables. Segregating them as to kind or nature of the receivable. Take note of significant increases/decreases. Know the causes of such significant differences.

Test of Details of Balances and Transactions:

1. Obtain/prepare a schedule of receivables w/ the ff:
name
address
balance of account
age of account balance
2. Pay particular attention to Receivables in the nature of advances to employees
for traveling expenses.
3. Foot the schedule and trace totals to GL
4. Compare balances in SL and test accuracy of
aging
5. Verify collections made after balance sheet date
6. Ascertain that AR represent valid claims against
existing debtors
7. Determine validity of AR
8. Determine collectibility of AR.
9. Confirm receivables
-write positive or negative confirmation letter
-jot down details and items that need to be
clarified
10. For receivables in the nature of traveling advances, prepare demand letters for
their liquidation in accordance with pertinent regulations.
11. Make an evaluation of results of work done
12. Prepare working paper and report

Receivables are also important element in financial statements so it must be examined carefully by an auditor.

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