Overstated Sales and Accounts Receivable
This case is designed like the ones in this chapter. Your assignment is to write the “ audit approach” portion of the case, organized around these sections :
Objective. Express the objective in terms of the facts supposedly asserted in financial records, accounts, accounts , and statements.
Control. Write a brief explanation of desirable controls, missing controls, and especially the kinds of “derivations” that might arise from the situation described in the case.
Test of controls. Write some procedures for getting evidence about existing controls and especially procedures that could discover deviations from controls. If there are no controls to test, then there are no procedures to perform; go to the next section. A “procedure” should instruct someone about the source (s) of evidence to tap and the work to do.
Audit of balance . Write some procedures for getting evidence about the existence, completeness, valuation, ownership, or disclosure assertions identified in your objective section above.
Discovery summary. Write a short statement about the discovery you expect to accomplish with your procedures.