Audit plan – Accounts Receivable and Notes Receivable
Audit Procedures
Audit
Objectives
W/P Ref.
Initials
Comments
Accounts Receivable
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
…show more content…
Since we have confirmed the cash balance, the beginning and ending A/R balance and the additions to A/R, we are reasonably assured that these reductions are free from material error.
Other Receivables
For the Year ended 12/31/2011
Note: In review of the Board of Director Minutes (GA-3.2), it was noted that the other receivables was an advance to Mr. Lancaster’s secretary. This was reclassed to an employee receivable (AJE# 3). It was also noted that the note carried a 1% interest rate. For the six month period this would be $5,000. Due to the nature of the note and the concern of whether Mr. Lancaster’s secretary will ultimately pay this back, no accrual is made here. It will be noted in the footnotes, however.
C-2
Apollo Shoes, Inc. Accounts Receivable Aged Trial Balance
Prepared by
For Year Ended 12/31/2011
Reviewed by
2011
Conf
Date
Date
Current
Past Due
2012 Payments
Net Sales
Total Balance
Type
Mailed
Rcvd
90 Days
Received #
Pay More Shoes
$586,779.54
$526,004.85
N
$526,004.85
C-4 $526,004.85
Nuke Me
$1,847,819.03
$35,028.59
N
There are several reasons why AGI should consider Mercury Athletic as an appropriate target for acquisition. First, acquiring Mercury could improve both companies financially. Acquiring Mercury would double AGI’s revenue. Although Mercury’s financial performance has been disappointing, they experienced top line growth of 20% in 2006. Unfortunately, their profitability has been disappointing due to price concessions to big box retailers and an unsuccessful women’s line. Mercury’s (and ultimately AGI’s) profitability could be improved by the synergies of the two companies merging. Synergies within supply chain, operations, research and development, and advertising should all improve Mercury’s EBITDA.
West Coast Fashions, Inc has decided to sell one of their segments, Mercury Athletic in the context of a broader reorganization. The head of the business development for Active Gear, Inc(AGI), John Liedtke, views this event as a good
* Tests done are questioning management about procedures for determining uncollectible amounts and reviewing amounts
This verification only tests for complete entries, it does not guarantee the correctness of the numbers entered. 8. Click on the Post Entry button. The entry will be recorded in the General Journal and posted to the General Ledger. Continue entering the transactions for the first week. If you discover that a transaction entered into the system at an earlier time needs correction, simply reverse or back out the incorrect entry and then enter the transaction correctly. More detailed instructions on error correction procedures are demonstrated in the next transaction.
assertion of existence and completeness for cash, this procedure is beyond the scope of this case and is not required
The following memo aims to outline the results of the audit of Apollo Shoes, give recommendations to improve the company’s operations, and provide justification for our qualified opinion.
All of the revenue and expense account balances in the adjusted trial balance will be extended. The statements of retained earning is prepared by entering the net income in the credit statement of retained earning column, and then add that to the beginning of the retained earning
I’ve attached a Sales internal control questionnaire from another engagement that I think you can use for Apollo. You may want to talk to Karina Ramirez to get answers to the questions.
Customers make purchasing decisions based on the information they have among products and the values of goods a company offers. For that reason, companies have to promote their products to increase products awareness. In order to achieve organizational goals, companies must understand the market’s needs to ensure the success of their businesses. Such information can be gained through research. The industry that will form the basis of this paper is Western Canadian Shoe Association. The three brands under study are Reebok, Adidas, and Nike.
We designed the Apollo Shoes audit case to introduce students to the entire audit process, from planning the engagement to drafting the final report. Students are asked to assume the role of a veteran of two-to-three “busy” seasons, “in-charging” for the first time. Communication between the students and client personnel and other firm members takes the form of e-mail messages from the engagement partner (Arnold Anderson), the engagement manager (Darlene Wardlaw), an intern (Bradley
The interview with Colin Smith, from Office Products Depot, meant I was able to identify the accounts receivable subsystem they used and their accounts receivable management. I focussed on their policies for the offering and checking of credit, managing credit levels, charging the credit customers, receiving payment from credit customers and the general management of credit customers. I will be using the information from the interview with Colin as well as information from fictitious accounts receivable to explain their policies.
The assertions that are relevant to line item two are existence, accuracy, and possibly cutoff. Existence (AU-C 315.A114 b.i) because Wally’s wants the bank to confirm that the asset of cash is in fact still in the account. Accuracy (AU-C 315.A114 a.iii) because Wally’s wants the bank to confirm the amount in the account so that they can accurately reflects the balance in their system. Cutoff (AU-C 315.A114 a.ii), because Wally’s is asking for confirmation at year end, December 31st.
1. A decision to retain an in-house arm of agency Weiden & Kennedy by Nike exemplify the concept of organizational design by allowing Nike use the agency’s creative designers to focus solely on Nike work, giving them un-parallel access to executives, researchers and anyone else who might provide Nike advertisers with their next inspiration for marketing greatness before listening to any other organization. Having the agency in the building is having them at their disposal at anytime they need them and also the agency will have to consider them first incase of any new ad or good idea discovered by the agency or when Nike needs to salvage a problem with the help of the agency. Thus, the agency at their finger-tips serves great advantages
The financial connections with customers who use output of the organization are handled through Accounts receivable (AR). This maintains personal accounts of the creditors and maintain various sub-ledgers such as control accounts, payments etc. as a part of General Ledger (GL).
The amounts and all the data pertaining to revenue recorded and money receipt statements and events are recorded properly in their correct accounting period. Assessment and allocation disclosure to examine the results of confirmations and review the adequacy of allowance for uncollectible accounts are necessary to review financial records for appropriate awarding and disclosure of account receivables. A positive confirmation is required to show whether customers indicate their agreement with the quantity payable to the client. Negative confirmation requests show that the customers react simply once they disagree with the quantity due to the client, (Berry, 2011).