Organic Name Reactions for the students and aspirants of Chemistry12th.pptx
Receivables and pre-payment
1. 1
AUDIT PROGRAMME
TRADE RECEIVABLES
Name of Client Sheridan AV
Year-end March 31,2015
Name of Auditor (s) Beth Rachel Millora
Rose Mae Perez
Aira Rebuyon
Stephani Cris Bonite
Eloiza Plaza
Mae Anelie Villa
Trade receivables are shown as current assets. If genuine, they are owed by real people or
real organizations. They come into existence as a result of the sale of goods or the
performance of services by the company on credit.
Substantive testing should be carried out at year end on the Statement of Financial Position
to gain evidence regarding the following assertions:
Presentation and disclosure
Accuracy classification and valuation
Rights and Obligations
Completeness and cut off
Existence or Occurrence
The following substantive tests were carried out on the trade receivables showing on the
Statement of Financial Position (see attached)
Audit
Assertion
Audit objective Test(s) to be carried out Details of testing Date and
signature
Presentation
and
Disclosure
Trade
receivables are
properly
identified and
classified in the
financial
statements
Appropriate
disclosures
have been
made about
debts that have
been factored
or otherwise
assigned
Perform analytical
procedures:
Calculate ratios
Analyse ratio results
Accounts receivable turn over.
A ratio of average accounts
receivable for a period divided by net
credit sales for the same period.
Step 1: BEG. ACCOUNTS Receivable +
ENDING Accounts Receivable.
Step 2: net credit sales / accounts
receivable = accounts receivable turn
over.
+ 465,407
2. 2
Check opening balances
to previous years
accounts to ensure
properly brought
forward
Obtain the aged list of
balances
Check a sample to
underlying records.
Test the list adds up.
Agree the list to the
control account and to
the financial statements
Is there an allowance
for bad debts showing in
the financial
statements?
672, 371
1,137,778
=1 ,137,778/ 2
= 568,889
2019
465,407
568,889
= 0.82%
2020
672, 371
568,889
= 1.18%
It simply means that Sheridan AV has
a high accounts receivable turnover
in 2020 of 1.18%.
The ratio indicates that Sheridan AV
has an idea of how efficient it
collects on debts owed or collects on
credits they have provide their
customers.
The balances in previous years is
clearly and properly forwarded in
opening of accounts.
All accounts in 31 march 2020 are
been recorded appropriately.
It is a little bit confusing as to digits
presented, but when I examine and
analyse deeply, the digits presented
is appropriately correct and it is an
advantage to the company per se
because the Trade receivables are
presented according to its origin of
accounts.
No allowance for bad debts has been
recorded in given financial
statements of Sheridan
09/12/2020
3. 3
Determine
appropriateness of any
disclosures relating to
trade payables
2020 2109
T/R 627,471 428,627
Other debtor 16,400 16,400
Prepayments 28,500 20,360
total 627, 371 465,07
Accuracy,
classification
and valuation
Rights and
Obligations
Receivables at
the Statement
of Financial
Position date
represent legal
claims of the
entity on
customers for
payment
The provision
for bad debts
represents a
reasonable
estimate of the
difference
between gross
receivables and
their net
realisable value
Vouch a sample of trade
receivables to
supporting
documentation as
follows:
Vouch from list of trade
receivables to suppliers
invoices, goods dispatch
notes and sales invoices
or other supporting
documentation to
ensure recorded at
correct amount owed.
Bad and doubtful debts
–
1.Obtain a listing that
breaks down the bad
debt provision by debtor
2. Obtain a list of debts
with balances
-over 3 months old
-in excess of their credit
limit
-in hands of liquidators
or receivers
Compare lists under 1
and 2 above to consider
adequacy of bad debt
provision. Obtain
explanations for any
material items that may
have been omitted from
bad debt provision
Obtain a list of
receivables written off
during year to ensure
they were authorised
and write off was valid
Based on the information of
transaction and events of Sheridan .
The VAT is misstated and wrong
calculation to get the correct amount
of VAT. On the other hand, I saw a
wrong presentation of sales invoice
number in the sales retail.
No bad debts has been recorded in
the year 2020 and 2019.
No document has been provided in
this. No bad record for bad debts.
09/12/2020
Completenes
s and Cut off
Trade
receivables
include all
claims on
customers at
the Statement
of Financial
Position date
Perform cut off tests for
sales and sales returns
1. Select a sample of
recorded sales
transactions from
several days before and
after year-end, and
examine supporting
On the sales transaction and events ,
some of the sales invoices are not
properly recorded that it should be.
So it resulted to difficulty of
determining the correct sales.
4. 4
sales invoices and
dispatch notes to
determine that sales
were recorded in the
proper period
2. Select a sample of
credit memos issued
after year-end, examine
supporting
documentation such as
dated goods received
notes, and determine
that the returns were
recorded in the proper
period.
There is no problem in terms of dates
and the sheet are properly recorded.
09/12/2020
Existence or
Occurrence
Receivables
balances
represent
amounts owed
by customers at
the Statement
of Financial
Position date
Perform a trade
receivables
circularisation (see
instructions on
supplementary sheet
page 4)
Where circularisation
has not been carried out
or unsatisfactory results
obtained carry out
alternative procedures
(see instructions on
supplementary sheet
page 4)
Recorded accounts, cash receipts and
cash payments exists and it pertains
to the entity.
09/12/2020
Signed
Auditors,
Mavilla
MAE ANELIE O. VILLA
Beth RM
Beth Rachel Millora
RoseMP
Rose Mae Perez
AiraReb
Aira Rebuyon
StephCrzPBB
Stephani Cris Bonite
Eloizaplaza
Eloiza Plaza
5. 5
RECEIVABLE
CHOSEN
AMOUNT LETTER
SENT
REPLY
RECEIVED
COMMENTS
Tempohead
Ltd
£92,436 10 April 2021 3 May 2021 Wrong presentation has
been observed. It should
be march 22,2021
where the payment is
already made but
unfortunately it was
recorded march 28 in
cash receipts.
Livyng DIY
Wholesaler ltd
£21,840 10 April 2021 29 April 2021 The amount was
correctly stated.
Innershine
Wholesaler Ltd
£35,300 10 April 2021 . 15 May 2021 Same problem
encountered from
Tempohead Ltd .
Wrong presentation has
been observed. It should
be march 29,2021
where the payment is
already made but
however it was
recorded April 3 in cash
receipts.
Zen AV
Wholesaler
£300,500 10 April 2021 13 May 2021 The amount was
correctly stated.
Bristol Audio
Ltd
£40,000 10 April 2021 NO REPLY
RECEIVED
Follow up is needed
Procedures to carry out if a trade receivables circularisation is not carried out or
unsatisfactory results have been obtained.
receivable
chosen
amount letter sent reply received comments
Bristol Audio
Ltd
£40,000 April 10, 2021 No reply Follow up
The remaining balance of Bristol Audio is in the bad debts accounts of the company and still
uncollectible accounts.