How to Audit Accounts ReceivableIf your company is subject to an annual audit, the auditors will review its accounts receivable in some detail. Accounts receivable is frequently the largest asset that a company has, so auditors tend to spend a considerable amount of time gaining assurance that the amount of the stated asset is reasonable. Here are some of the accounts receivable audit procedures that they may follow: Show
Accounts Receivable Audit RisksThe preceding list of audit procedures is designed to detect a variety of audit risks, which include the following:
Which of the following should be considered an audit procedure for obtaining evidence?Audit procedures to obtain audit evidence can include inspection, observation, confirmation, recalculation, reperformance, and analytical procedures, often in some combination, in addition to inquiry.
Which of the following procedures would provide the most reliable audit evidence?Which of the following procedures would provide the most reliable audit evidence? Inspection of bank statements obtained directly from the client's financial institution.
What is the best type of audit evidence?Examples of auditing evidence include bank accounts, management accounts, payrolls, bank statements, invoices, and receipts. Good auditing evidence should be sufficient, reliable, provided from an appropriate source, and relevant to the audit at hand.
Which type of audit evidence is the most commonly used in an audit?The most common type of evidence is simply asking the client and employees questions. This is known as inquiries of the client. Inquiries are the most common because they are the easiest type of evidence to obtain and they can result in direct answers to the questions the audit is attempting to ask.
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