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Mam can you please explain to me, wrt DAISY DESIGNS CO.
Why can’t we do some ”post y/e receipts” testing? Wouldnt we atleast have the invoices or GDNs with us to agree the receipts to? or is it that we’re at completion stage concerned with F/S as a whole so we’re more into getting a whole lot REVENUE and RECEIVABLES figure, which in no way is possible to verify as individual balances accuracy is not indicative of how many receivables or the amount of sales we’ve made?
It’s really precluded by the scenario “the audit ream has been unable to access the sales ledger to undertake detailed testing of revenue or year-end receivables”.
This detailed testing would certainly involve sales invoices – so the scenario is painting a picture in which you cannot match after-date cash receipts against individual sales invoices on the system – because this information has been lost. (It doesn’t matter why that is the case – that is the scenario that we have to work with.)
GDNs are not an “accounting record” but supporting documentation – and there seems no reason why these should not be available (e.g. copies held in a warehouse). However, these cannot be matched directly against cash receipts because they are not “priced up” – they show only quantities of goods.
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