- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
.
-
Posts
-
Hello sir, hope u are well.
sir i want to know how does reviewing post year-end cash receipts can assist in obtaining audit evidence about rights and obligation assertion over receivable.
are there any other assertions it can help to test
People don’t pay money over for nothing (in business!) If a company receives cash in January – either the sale was in January – or the customer owed the company in respect of an earlier credit sale.
If at 31 December a customer says “I owe you [the company]” $150,000 that is evidence of the existence of the debt and the company’s right to the asset (receivable) and also the occurrence during the year of the sale transactions that make up that $150,000.
However, the asset is not worth $150,000 if the customer has neither the means or the intention of paying $150,000.
That the customer pays $150,000 after the reporting date provides further evidence of existence and rights – but, most importantly, it confirms “accuracy, allocation and valuation” (though allocation is not relevant in this case).
- The topic ‘Rights and obligation assertion’ is closed to new replies.