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Hi,
I would like just to confirm if my below list of substantive procedures related to receivables is correct.
1. Reconcile account receivable balances with receivables control account and investigate any differences.
2. Agree receivable ledger accounts to listing of aged receivables and vice-versa
3. Compare average trade receivable days with the previous year and investigate any anomalies
4. Compare receivable balances with the last year’s and investigate differences.
5. Scrutinize credit notes issued post year end and verify if related to receivable pre-year end.
6. For a sample of invoices issue pre and post year end compare the dates with the dates on related GDN and test correct application of cut-off.
7. Agree received customer confirmation letters with receivable ledger accounts.
8. Trace payments post year end to invoices outstanding at year end to confirm existence of the receivable amounts at year end.Thank you very much, please post any correction or adding if needed.
Salvatore
Very good. In addition, perhaps look at the provisions formirrecoverable debts this year and last for valuation. Your point 8 also helps with valuation.
It would also be usual,to,trace some invoices still outstanding back to despatch notes and orders to give evidence that the invoices were genuine (existence of the receivable).
Welcome to my forum!
Short answer – NO.
Most substantive procedures questions will be worth 5 marks, say, for some aspect of an account balance/class of transactions. You will need to describe 5 substantive procedures that are relevant in the circumstances – i.e. to the given scenario and, if explicitly stated, for the stated assertions. If the assertions are not explicitly stated, you have to work out what they are from the “matters identified”. So, for example, if the identified matter is increasing receivable days, your forum would have to be on recoverability, i.e. valuation.
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