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in the procedures for receivables the text lists one proc as:
inspect a sample of post year end credit notes to identify any that relate to pre year end transactions to ensure that they have not been included in recevables
if a credit note has been issued for a sale that happened before year end, it will be entered post y/e. it depends on when the CN was actually issued.
is the auditor trying to check CNs that SHOULD have been recorded pre y/e but were not?, ie CNs were issued pre y/e and were not recorded?
No. The auditor is trying to detect false sales:
before yr end:
Dr Receivables, Cr sales and issue false invoice but don’t sent it. This boosts sales and profits.
after yr end
Dr Sales Cr Receivables and issue false Cr note
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