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Review the ‘after date’ cash receipts and follow through to pre-year-end receivable balances.
Here is an answer to a substantive procedure to confirm receivable valuation balance.
My question is if the auditor discovers a receivable has paid ‘after date’ what effect will it have on the valuation of the receivable balance in the financial statement?Whilst your question is not very clear, I will say that if a receivable balance is cleared after the reporting date and the amount is seen in the subsequent bank statement, it provides additional support in relation to the valuation of the receivable. Completeness, existence and accuracy would have already been established by review of invoice and goods dispatched notes (if it exists).
Say a customer has a material balance of $100,000 with your client and hasn’t made any payments so far. Reviewing the after date cash receipts provide evidence about whether the client has any intention to pay. If no payments are received before or after the year end, the receivables may have to be written down (irrecoverable debts) which affects the value of receivables
I hope this helps. Happy Studying! :).
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