Professional Documents
Culture Documents
Statement
Presentation Outline
Accounts receivable
maintains the accounts
receivable subsidiary
ledger. May be a
computerized
accounts receivable
master file.
General accounting
maintains control
accounts in the
general ledger.
D. Maintaining Custody of Goods
Custody of goods in
warehouse or awaiting
shipment.
E. Suggested List of Duties to be
Segregated
Authorization Functions:
Receiving orders for sales
Granting credit and pursuing unpaid accounts
Recordkeeping Functions:
Billing customers and recording sales
Maintaining inventory records
Maintaining general ledger accounting records
Maintaining detailed accounts receivable records
A. Existence
B. Completeness
C. Accuracy
D. Classification
E. Timing
F. Posting and Summarization
Form #36
Sales Adjustment Form Unrecorded sales returns
Discount for and allowances can be
Damaged material and can be
merchandise $5 used by a company’s
Approval RS management to
overstate net income.
General Journal Ensure that prenumbered sales
Sales Allowance 5 adjustment forms are used,
Acc. Rec. 5 and that all forms are
accounted for.
Record Adjustment #36
C. Major Types of Sales Adjustment
Transactions
A. Existence
B. Completeness
C. Accuracy
D. Classification
E. Timing
F. Posting and Summarization
A. Cash Collections
Existence
Customer Customer
A’s B’s
Customer A Customer B
Account Account
B. Audit Tests for Uncollectible
Accounts
Major concern is that client covers up a theft by
charging off accounts receivable that have actually
been collected.
Audit tests for proper authorization of write-off.
This often involves an aged analysis of
receivables. It is also usually necessary to
examine correspondence in client files to establish
uncollectibility.
After the auditor has concluded that the accounts
should be charged off, the auditor should verify the
corresponding journal entries and postings into
the general and subsidiary ledgers.
Summary