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Which of the following is not an appropriate audit test on receivables
1.reviewing aged receivable analysis
2. Scrutinizing correspondence with customer
3.Adding up the receivables balance with ledger account
4.Reconciling statements with the ledger account balances.I am doing receivable quiz on opentutuon. the answer given by you is 4 i dont understand why?
Thnaks
A reconciliation is an examination of two balances which identifies any differences to ensure that they are valid and properly accounted for, so proving the balance that is recorded in the entity’s books. The other balance comes from another, independent source. So, for example, a bank reconciliation is prepared against the bank statement prepared by the bank and supplier’s reconcilations are prepared against statements issued by the supplier.
The statements of receivables balances, which the entity will send to customers when requesting settlement of amounts due, depict what is recorded in the entity’s receivables ledger – there will be no reconciliation because they must be the same as one is sourced from the other.
Hopefully whichever test you thought was not appropriate you now understand is appropriate.
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