Concept Maps of Receivable Cycle
Account
Standard(s)
Initial Recognition
Subsequent Measurement
Impairment
Derecognition
FS Assertions - Balance
FS Assertions - Transactions
Audit Risks Threats
Appropriate Audit Procedures
Receivable Sales / Revenue
PAS 32,39, PFRS 7,9,15
Current (Short-term) - Face value
Non-Current (Long-term)
- Face value if with same or
reasonable rate
- Present value if with
unreasonable or no interest rate
Net realizable value (receivable
less allowance)
Short-term: Gross AR - allowance
Long-term: Present value or
carrying value
Provisions for Bad Debts (doubtful
accounts or uncollectible accounts)
Collection, Write-off, Factored,
Discounted
Existence, Rights and Obligations,
completeness and Valuation
Occurrence, Completeness,
Accuracy, Cut-off and
Classification
1. The company intentionally
overstates accounts receivable
2. Company employees steal
collections  overstatement of revenue
3. Without proper cutoff, an
overstatement of accounts
receivables occurs 
4. Allowances are understated
1. Confirm accounts
receivable balances (especially
larger amounts)
2. Vouch subsequent period
collections, making sure the
subsequent collections relate to
the period-end balances
(sampling can be used)
3. Thoroughly review
allowance computations to see
PAS 18, PFRS 15
Recognize revenue to depict
the transfer of promised goods
or services to customers in an
amount that reflects the
consideration to which the
entity expects to be entitled in
exchange for those goods or
services.
Rights and Obligations and
Completeness
Occurrence, Completeness.
Accuracy, Cut-off and
Classification
1. The company intentionally
overstates revenue 
2. Without proper cutoff, an
occurs 
3. Revenue recognition
1. Create comparative
summaries of all significant
revenue accounts,
comparing the current year
amounts with historical
data (three or more years if
possible)
2. Create summaries of
average per customer
income and compare with
if they are consistent with prior prior years (you may want
years; compare allowance to do this by specific
percentages to industry revenue categories)
averages; agree to supporting 3. Compute average profit
documentation (e.g., histories of margins by sales categories
uncollectible amounts); and compare with previous
recompute the related numbers years