1.

I think the company lacks internal control procedure and organized policies for account
receivable, for who should handle such responsibilities and how those responsibilities should be
handled. The auditor also somehow failed to test the details supporting the account. They also
failed to examine or review the cash receipt received.
2. The company obviously affects the presentation and disclosure assertions in terms of
understandability and completeness.
3. Possible substantive tests to verify the accounts receivable of the company are;
 Scan entries in the relevant ledger accounts or review summaries of recorded
transactions regarding the accounts receivable. Reclassification of entries is necessary in
such case.
 Check the suitability or propriety of classification of items in account receivable.
 Auditor may do an analytical review and procedure encompassing the investigation of
identified relationship that are inconsistent with other relevant information.
 And also perform the test of details to examine the actual details making up the various
account balances.