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Hi, I was just wondering who could help me to solve the following problem when I study the textbook.
I saw a sentence from the textbook that “ when audit the existence of the receivables, the auditors should examine the customer’s account and customer correspondence to assess whether the balance outstanding represents specific invoices and confirm their validity”. What does it mean and what are the specific invoices? Waiting for your reply, thanks very much!Any balance should grow only when an invoice is issued – that’s what causes receivables. Therefore any year-end balance should be reconcilable to a list of specific invoices that have been sent and which are still not paid. What you don’t want in receivables is a balance which is there because of some sort of, say, lump-sum journal adjustment. That would imply that a real sale had not been made and that the adjustment was made to boost receivables and sales.
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