Trade Recievables Flashcards
(9 cards)
1
Q
What is the revenue process?
A
- Customer Order
- Despatch and invoicing
- Recording of transaction
- Receive customer’s cheque
- Month end procedures
2
Q
What is the risks involved in Customer order and despatch and invoicing respectively?
A
- Valuation - this is because you might collect orders from someone that might not pay back, and because of that, you might not have accounted for the bad debts, which causes a misstatement in the allowance of impairment of TR
- Completeness
When goods are delivered but the invoices are not sent out
3
Q
What are the assertions that are needed for Recording of transaction
A
- Accuracy - transactions are recorded at wrong amounts
- Classification - transactions are posted to wrong accounts
- Occurrence - transactions recorded but goods not delivered
- Valuation - receivables not collectible because customers cannot pay
- Cut - off - revenue recorded in wrong accounting period
4
Q
What are the assertions involved in Cash collection?
A
- Completeness
Money is received but goods not delivered - Occurrence - amount recorded but money yet to receive
- Accuracy - amounts are wrongly recorded
- Cut-off - Amounts received are recorded in wrong accounting period
5
Q
What are the assertions involved in the month-end procedures?
A
- Existence
transactions are not adequately supported, and customers can be fictitious - Valuation - Inadequate allowance for uncollectible receivable balances
6
Q
What are the key assertions?
A
Valuation and Existence
7
Q
What are the audit procedures for trade receivables for the key assertions?
A
- Valuation
Review trade receivable aging - Existence
trade receivable confirmation
8
Q
What is the trade receivables confirmation process?
A
- Select samples from trade receivables aging
- Request Client to prepare confirmation letters based on template provided by auditors
- Auditor to mail out letter independently
9
Q
A
