Features of Auditing Accounts Receivable at Buyers

2.5. Characteristics of auditing receivables from buyers

Accounts receivable from buyers arising from the sales process should have a relationship

closely with the process that creates the sales - collection cycle. However, due to the "delay" in the collection process compared to the sales process, the amount recorded in this item of

belong to

The balance sheet, also the balance of accounts receivable from customers, is the cumulative number from the previous business processes to the end of this business period . At the same time

arising and payment terms vary , receivables are also related to

Many buyers have characteristics, business conditions, management and payment ability.

different and may result in overdue , difficult to collect or irrecoverable debts .

buyer . Therefore , with all these receivables , it is necessary to present and explain clearly the

receivables should be considered as an internal control work. To control the

receivables and collection guarantees, companies must monitor directors regularly

throughout the statements and journals ; at the end of the period , a balance sheet must be prepared between revenue and expenses.

receivables and outstanding receivables

, balance sheet between debts

overdue with different deadlines … The main purpose of this control work is to

contribute to solving both payment and settlement problems and ensuring economic efficiency

general business . Accordingly , the objectives presented in the audit need to be fully considered . From there, analytical tests need to be thoroughly used in planning.

audit plan , audit program

in reality

combined audit

rigorous

online

continue the balance . On the other hand , if the goods and cash received are as they should be , the

unit is given

Auditing with specific physical form should be able to combine

inventory with both

With other audit methods , receivables are not so easily verified. Therefore , in the audit of receivables , the investigation method through selection

pattern

and get the identity

can be considered as one

special

private in work

food

porch

all items

pepper

and audit procedures for receivables. Table 2.5 is an example of audit objectives.

special accounting of receivables as well as examples of key auditing procedures

corresponding to those goals .

Confirming receivables is the most important procedure (way ) to meet the

Effective , measurable and timely goals

). According to international practice,

core

receivables ( investigation to verify ) along with physical examination (inventory )

Assets are two common requirements. This confirmation is combined with tests.

work

(karma)

(v) to verify and detect violations related to the

fictitious income, to amounts that are not yet clear or have become debts

hard to claim or cannot be claimed.

identity card

This does not guarantee detection .

new

wrong

mistake above but still

trust

more than just a test

career

the case of its creation

out by proof

from reader

set up

outside the unit

audit . However, this confirmation is unlikely to be

ability to detect

all the missing pieces because it is pickled

on a list of receivables

in which there is usually no insurance business and can deduct this insurance from the purchase itself

also irrelevant or unverifiable. Therefore , the

combine

keep track

serious

career

system with identification

is a necessary question . Of course if

rigorous

career

show internal control system

understanding

force

identity card

fish

receivables need to be reduced and vice versa.

Table 2.5 . Objectives and procedures for auditing receivables from buyers

General audit objectives

Audit objectives of receivables	Examples of audit procedures equivalent to common use
Common sense	- The balance of both sales and receivable accounts are reasonable .	- Check the statement or balance sheet for large amounts of money or any unusual signs . - Calculate ratios and monitor as a big change from last year .
Mechanical precision	- The receivables in the statement or balance sheet of receivables by term match the receivables tracking book and the number total weight transferred right in the ledger	- Select some receivable accounts and compare them with the cash receipt book and the ledger . - Consolidate pages and tables statement or balance sheet and reconcile the related accounts in the ledger .
Effective	- Receivables recorded in the statement or balance sheet of receivables on a timely basis all limits are real	- Obtain and track buyer 's receipts of both large and typical small - scale receivables .
Complete ( full )	- Select some accounts ( buyers ) from the statement or balance sheet to compare with the detailed book of cash receipts.	- Reconcile the accounts receivable statement or balance sheet and compare it with the general ledger . - Reconcile sales and shipping invoices with cash receipts and accounts receivable ledger . - Accounts receivable have arisen In the process of processing the goods that have not been processed are fully recorded .
Rights and obligations	- Check the records of all invoices related to receivables , paying attention to discounts and rebates. - Investigate through contact with relevant managers regarding the completeness of in structure and in revenue	- Receivables in the statement or balance sheet are all in the company 's possession ( excluding discounts and refunds ) . discount etc.).

Maybe you are interested!

continue with the recorded cash receipts.

Calculate price

- Accounts receivable

in the statement or balance sheet of receivables over time are calculated

correct ( both in total and in terms of receivables).

- Collect and track buyer 's receipts for both large and small scale receivables .

- Discuss with your account managers about the collection of overdue accounts and assess the collectability of the money.

Classification

- Accounts receivable

in the statement or balance sheet receivable by period are properly classified.

- Reconcile receivables on

statement or balance sheet of receivables with vouchers and detailed ledger .

- Investigate through contact with managers about receivables on documents and detailed ledgers to verify classification .

Present

- All receivables are

presented and explained clearly .

- Reconcile balance sheets on accounts

receivables with classification of items on the balance sheet and notes .

- Check all payment receipts , relevant meeting minutes and discuss with the manager about all items .

receivables are not clear and re-verify the director's explanations.

Timely

- Revenue operations

Money is recorded on time in relation to sales transactions .

- Select the sales transactions at the end of this period and the beginning of the next period to compare with the related shipping documents , paying attention to the actual shipping date and

date of recording

- Check all returned shipments after the date of financial statement preparation and the relationship to the settlement period .

When applying the procedure

identity

For receivables , the auditor must decide

about the type of agent to choose.

, about the day of awakening

porch

and about the basic structure

choose

and about the items

Regarding confirmation types: there are two common types of receivable confirmation:

core

confirm and confirm

appendix

Confirmation of the request for notification of the debtor 's ( buyer 's ) decision on

any request for confirmation of debt from the creditor (seller ) or the right ,

wrong or

There is a note . In case

now , any request for confirmation of

All auditors were answered .

Negative confirmation only requires notification from the debtor (buyer) when they do not

the same amount as stated on the buyer's confirmation request .

and send on monthly report

With identification

affirmative, when not multiplying

reply , usually have to do extra work

as self - verification . Therefore, this confirmation is more reliable evidence than the

core

reverse

again , with identification

appendix

No answer is considered a violation .

even if the buyer is unaware of the identification requirement

. In return, confirm the negation

has less cost so with the same cost can perform more negative confirmations

The price is lower so with the same cost it can be done .

porch

multiple identities

negative than positive confirmation. The decision about which type of confirmation to use is a matter of the auditor's judgment, and the general direction that can be given to the

The situation where affirmative statements are needed is :

- When the receivable account number ( detailed account by debt ) ( amount ) is large .

have scale

- When there is suspicion of a receivable account ( details by debtor) being violated .

single

g possibility of error

- When there is reason to believe that the buyer considers the matter to be serious .

identity

(like ty ̉ le)

reply confirming the assertion in the previous period ( low for example).

- When there is a legal document requiring brokers and traders to comply to ensure healthy commercial activities.

porch

When the above situation does not occur

, special

know when to conclude

damaged

understand

internal control system

For all other terms and conditions , negative confirmation can be used .

It is also possible to combine both types of confirmations in a general way and use positive confirmations in material cases ( large scale and high probability of error ), while negative confirmations are used in other additional cases .

About time ( date ) : certificate

send to buyer for testing

The balance of the receivable accounts is recorded on the balance sheet. Therefore , the date of sending the confirmation should be as close to the date of preparation of the balance sheet. However, it may be due to the requirement to complete the

work

audit in urgent need of certificate

may have to be sent on the same day

before setting up

table . case

this is acceptable

If the internal control system

effect

and there is no such thing as civil risk

to insolvency . Therefore

, If

To decide whether to collect receivables before the end of the year, it is necessary to test the following :

career

the day of the body

and date of establishment

balance sheet

The basic idea is as follows:

choose

: There are many factors that influence the number of confirmations that must be sent.

- Materiality of receivables : if the balance of receivables is of a material size ,

large compared to the balance of other assets then the basis of the conflict

choose

bigger

- Number of receivables: of course, the number of individuals sent will be more with the unit.

large scale specialized goods , many types of goods and open sales relations

wide open with many buyers and vice versa

again

- Uniformity in the size of receivables: if all receivable accounts are of approximately the same size , then less confirmation is required when the size of these accounts is spread out .

out a range of different amounts . Type of confirmation used: with additional confirmation required

identity card

send out clearly must be greater than identity

affirm

- The results of the internal control system assessment

multiple choice test

use

- The results of last year 's personal statement .

- The possibility of customer bankruptcy and similar factors affecting expected audit risk.

- About the items

must choose

to confirm

: pay attention to the size of the balance and

The timing of the receivables . Typically , the focus of confirmation is

as the balance is large and has been spread over many months . However , it is also necessary to combine the remaining balances .

choose stupid

Maintain the job

Auditor 's control in personal identification

: to ensure receipt

Buyer 's subjective opinion and quality

g of personal identification .

Case

company is

multiplier

one

and which support stage to send to

The measurement also requires an auditor 's check .

only person

identity card

must be earth

spend

of the auditing company ; certificate

send by post

also a creative factor

basic

for work

collect

objective opinion . If the request for identification

be checked again, need to consider

Technical reason: it is possible that the buyer has changed his real address but there is also the possibility of fraud in selling and collecting money .

Monitor and handle all non - returnable accounts .

food

porch

in order

cover . Normally , if not multiply

identity card

first time send , need to send

If you still do not receive it after the second attempt , you will need to contact support .

to consider the validity of the account balance. Accordingly , with each

identity

affirmative

Feedback from buyers can be made

porch

the following support methods :

Multiple Choice

cash receipts

next : maybe the certificate is not available

The response is either because the receivable is not valid or there is an agreement to pay at the time

human error

. Therefore

Review the following cash receipts with the counterparty .

private screening

Cash and receivables ledger is one

how to support

positive for both unresponsive receivable confirmations and receivables

does not match the specific evidence .

uncollectible sales

money with the amount collected

Verify sales and collection documents such as sales invoices to determine the parties .

buy and set up

invoice to pay the buyer ; advice

move to determine

understand

force

of the transport business.

Whether these support procedures are used depends on the materiality of the unanswered confirmations, the type of misstatement found in the answered confirmations, and the auditor's assessment of internal controls. However, in normal circumstances, support procedures should be used both as additional verification and as a basis for inference from the sample to the sample population.

Variance Analysis: Once confirmation results are available, the reasons for the discrepancies between the books and confirmations need to be determined. Typically, these discrepancies include:

- The recorded receivable amount has been paid: this factor may appear because the money is still in transit, the money has arrived but has not been recorded, there is an omission to record, or fraud to embezzle sales revenue.

- Buyer has not or does not receive the goods: The delay in recording compared to the time of sale is often due to the seller recording on the shipping date and the buyer recording on the receiving date. Therefore, a specific survey is needed to determine the boundary between goods on the way to the buyer and goods not shipped or not reached.

- Sales returns: The difference between the book and confirmation numbers may include sales returns due to incorrect recording or incomplete return procedures... To verify the discrepancy, this factor needs to be examined like other discrepancies.

- Errors in the recording or sales process : Sales transactions are recorded during transportation. Errors may arise later such as: calculating the price of goods, damaged goods, buyers not receiving the full quantity of goods... It is necessary to examine the valuation and completeness of similar transactions.

Finalization of confirmation: After collecting and processing confirmations, including supporting procedures, it is necessary to re-examine the internal control system based on an analysis of the conformity between the newly discovered deviations and the initial assessment of this control system. At the same time, it is necessary to scientifically extrapolate from the selected sample to the receivable population even when the difference from verification does not significantly affect the receivable item.

On that basis, the final decision on the balance of receivables is made through confirmation and collection of accompanying evidence .

Test written off receivables and unrecorded receivables:

Uncollectible sales proceeds are written off and are a financial loss for a variety of reasons, from possible errors in sales procedures to possible fraud in misappropriation of actual receipts. Therefore, a comprehensive examination of written-off sales proceeds is required. The usual procedure for such tests is to re -examine the authorisation of the write-off by the responsible person. In this case,

It is necessary to consider both the control environment and control procedures, especially in

the nature of the person authorized to review and the economic relationship and separation of duties between the bookkeeper and the person approving the write-off.

The possibility of errors in recording receivables also includes "fraud" between actual amounts collected but still transferred to the books as revenue to embezzle the collected amount or hide the cash deficit. In this case, it is necessary to re-examine the documents, especially the receipts or reports.

and a receipt for the amount paid. This method is often time consuming and should be combined with

in conjunction with the review and assessment of internal control weaknesses in cash collection.