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Sir kindly confirm whether or not these substantive procedures can gain assurance over the completeness assertion of receivables:
1) For a sample of unpaid customer invoices as at year end,trace amount back to the individual sales ledger account.
2) Agree the balance from the individual sales ledger account to the total as per the receivables aged analysis.
3) Match the total of the receivables aged analysis to the sales ledger control account.
1 Not sure I understand this. How do you know what the unpaid invoices are other then by looking at the sales ledger.
2 No. The receivables aged analysis is derived from the sales ledger balances.it is irrelevant to completeness.
3 No, as 2 above.
Sir for number 1 in particular this is the point i am trying to bring out by the audit test.
1) I would look at the physical invoice and trace this back to the receivables ledger to ensure this invoice amount was included as part of the holistic receivable balance.
Viewing the invoice in the client’s computerized system as at year end will tell me if a payment was received or not, hence this will tell me if it was unpaid as at year end or not. If unpaid as at year end, for this invoice i will trace it to the individual sales ledger to ensure it was included.
That explanation is very different to what you wrote.
OK to trace physical invoice to receivables ledger. The way you tell if an invoice has been paid is seeing cash matched on the receivables ledger. As I said the aged listing is a derivative of that information, not a verification of it.
No more on this.
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