SUBSTANTIVE PROCEDURES FOR RECEIVABLES

ASSERTIONS AUDIT OBJECTIVES AUDIT PROCEDURES SPECIFIC AUDIT

PROCEDURES
Existence or To determine that  Obtain schedule of  Selected accounts
Occurrence receivables exists and aged loans and should be traced to
represent bona fide receivables the subsidiary ledger.
Rights and obligations owned to schedule and  Determine the
Obligations the company as of reconcile to method, timing, and
the statement of ledgers the number of
position date.  Confirm confirmations to be
receivables with requested.
debtors.  Send confirmation
 Perform analytical letters to the debtors.
procedures  Investigate any
exceptions noted by
customers to recorded
balance
 Prepare summary of
the results of the
confirmation
 Perform the following
alternative procedures
for any unreturned
confirmations: (1)
Examine collections
made subsequent to
the confirmation date;
(2) Trace invoice
number and amounts
collected to the
individual customer’s
account and to the
record of cash receipts
and to the bank
deposit
Completeness To determine that all  Test cutoff to
transactions relative determine
to receivables have whether
been recorded in the receivables are
proper accounting recorded in the
period. proper accounting
period
Valuation and To determine that  Review  Verify past-due
allocation receivables are collectability of accounts receivable
recorded and receivables and listed in the aging
presented at proper determine the schedule that have
amounts in adequacy of not been paid
accordance with allowance for subsequent to the SFP
PAS/PFRS. doubtful accounts date
 Recalculate the  Determine credit
interest income ratings for delinquent
from the loans and unusually large
receivable accounts
 Evaluate
confirmations
exceptions for
indication of amounts
in dispute or other
clues as to possible
uncollectible account
 Summarize in a
working paper
accounts considered
to be doubtful
 Independent
computation of the
interest earned during
the year on loans
receivable
Presentation and To determine that  Evaluate financial  Review the minutes of
Disclosure the receivables are statement directors’ meeting
properly presented presentation and and confirm with
and classified in the banks any selling or
statement of financial disclosure of assigning of accounts
position receivables receivables
 Obtain written
client
representations
regarding pledge,
discount or
assignment of
receivables, and
about receivables
from officers,
directors, affiliates
or other related
parties