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Audit plan – Accounts Receivable and Notes Receivable Audit Procedures Essay

1. Obtain an aged trial balance of individual customer accounts. Recalculate the total and trace to the general ledger control account.
2. Review the aging for large and unusual items.

3. Send confirmations to all accounts over $X. Select a random sample of all remaining accounts for confirmation. a.i.1.a.i.1.a. Investigate exceptions reported by customers. a.i.1.a.i.1.b. Perform alternative procedures on accounts that do not respond to positive confirmation requests. a.i.1.a.i.1.b.i. Vouch cash receipts after the confirmation date for subsequent payment. a.i.1.a.i.1.b.ii. Vouch sales invoices and shipping documents.

4. Evaluate the adequacy of the allowance for doubtful accounts. a. Vouch a sample of current amounts in the aged trial balance to sales invoices to determine whether amounts aged current should be aged past due. b. Compare the current-year write-off experience to the prior-year allowance. c. Vouch cash receipts after the balance sheet date for collections on past-due accounts. d. Obtain financial statements or credit reports and discuss with the credit manager collections on large past-due accounts. e. Calculate an allowance estimate using prior relations of write-offs and sales, taking under consideration current economic events. Notes Receivable

5. Review the bank confirmations, loan agreements, and minutes of the board for indications of pledged, discounted, or assigned receivables.

6. Inspect or obtain confirmation of notes receivable.

7. Recalculate interest income and trace to the income account. 8. Obtain written client representations regarding pledge, discount, or assignment of receivables, and about receivables from officers, directors, affiliates, or other related parties. 9. Review the adequacy of control over recording of all charges to customers (completeness)-audited in the sales transaction
test of controls audit plan.

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