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Hello mam, I hope you’re doing good.
I’m concerned since my answers to part (b) of this Question barely match the mark-scheme.. It’d help me immensely if you could help me figure out where have I gone wrong….
ACCURACY VALUATION ALLOCATION:
Obtain breakdown of list of Receivables, cast to ensure arithmetical accuracy and agree to control account.Discuss allowances with management And compare allowances with irrecoverable debts to assess reasonableness and to verify valuation
Perform a proof in total for allowances compare with actual allowances and investigate significant fluctuations.
(ALso mam, my point of reviewing Credit Balances is under this category where as in markscheme it is under completion, so would it be invalid to include it here?)
COMPLETENESS:
trace sales order to GDN to SDB to invoices to G.L and F/s/Calculate and receivable days and compare with previous year to look for any omissions
RIGHTS AND OBLIGATIONS:
Inspect post Year-end receipts as customers would pay if they oweobtain written representations from management that they own the receivables
I am really sorry but I am unable to provide you with a satisfactory response to this post as it would open the floodgates to “mark answers” – I am not employed by OpenTuition – I donate my time to answering technical queries.
I can make a couple of generic comments and suggest only that you please please refer to this clearly flagged post https://opentuition.com/topic/how-to-score-marks-in-aa-essential-guidance – one of the questions is a substantive procedures question which provides guidance on what earns marks in this area.
1. Procedures do not necessarily match uniquely to just one financial statement assertion – so for example, although obtaining confirmation of a receivable balance from a customer is the primary test for existence it is also a test of accuracy and valuation – it’s not sufficient for these assertions because the customer might not pay – hence the need to verify after-date cash
2. You should only suggest written representations when all the other evidence taken together for the assertion might not otherwise be quite sufficient. Since there are lots of sources of evidence of ownership (e.g. terms of sale to customer in the company’s name) you don’t have to ask management “does the company own these receivable accounts” (unless there was a suggestion that some accounts might be factored but I think that is beyond AA). What you would want representation about is whether management has made sufficient allowance for all known bad/doubtful debts since management should have more knowledge of its customers affairs than the auditor.
Oh and it’s worth reading the examiner’s report too https://www.accaglobal.com/in/en/student/exam-support-resources/fundamentals-exams-study-resources/f8/examiners-reports.html
The examiner often gives examples of things that should/should not have been written.
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