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Auditor

AUDIT PROCEDURES ASSERTION WP Ref Initials

This audit program covers a variety of tests that can be

performed using TopCAATs to gain comfort over Trade

Receivables. Not all tests will be appropriate on every

engagement, and some of the tests duplicate coverage

as your approach may depend on the information you

have available.

In addition, this is not a comprehensive list of tests, and

it may be appropriate to add additional tests to ensure

you gain sufficient comfort.

Please ensure that you select appropriate tests, and

avoid over/under auditing.

C = Completeness, E = Existence, A = Accuracy, V =

Valuation, O = Ownership, P = Presentation

F = Fraud, D = Disclosure

Ref Description Assertion

Trade Receivables Ledger Section Module

Obtain a listing of account balances comprising the

period-end trade receivables ledger and run the Trade

Receivables Section Module. The listing should include

the following fields

· Account code – the customer account

code/number (mandatory)

· Account name – the customer account

name

· Account balance – the period end balance

on the account (mandatory)

· Credit limit – the customer account‟s credit

limit

Using the „credit balances‟ test, extract all accounts with

a credit balance.

F

·         Understand the reasons for these credit

balances and whether they represent fraud or

error, or are legitimate.

·         If the total of credit balances is significant,

ensure they have been included in Trade

Payables, rather than Trade Receivables

C

Using the „over credit limit‟ test, extract all accounts with

balances greater than their credit limit.

E

·         Understand whether these represent a

failure of credit limit controls, or whether they have

been authorized.

3

1

2

·         Understand whether these represent fraud

or error

F

Using the „over amount‟ test, extract all accounts with a

significant balance

·         Confirm the period-end balance with the

customer via letter, e-mail or other suitable means

·         Ensure the balance confirmation is sent

directly to the Auditor, rather than via the client

·         Reconcile the balance recognized by the

customer to the period-end balance per the ledger

·         Where responses are not received after

chasing, perform alternative procedures to verify

these significant balances

5 Review the column statistics report, and ensure that the

source data appears reasonable (i.e. no text entries in

numeric columns, blanks in date columns, etc)

Other Trade Receivable Ledger Tests

Review the ledger for any accounts that are related

parties and ensure that period-end balances are

disclosed.

Use the specific comments tool to look for known

related parties

D

F

8 Review the ledger for any unusual account names, such

suspense accounts using specific comments

E F

9 Where the remaining balances not confirmed in test 4 is

significant, use an appropriate TopCAATs sampling

method to test the remaining balance (e.g. MUS)

CEA

10 Perform Benford‟s testing on the ledger to ensure that

the data appears to be natural

F

Trade Receivables Listing Section Module

Obtain a listing of transactions comprising the period-

end trade receivables ledger and run the Trade

Receivables Listing Section Module. The report should

include the following fields

· Account code – the customer account

code/number (mandatory)

· Account name – the customer account

name

3

4 C E A

6 D

7 Review the ledger for any employee receivables and

ensure these are legitimate and disclosed where

appropriate. Join 2 sheets can be used to identify

matches between employee names and receivable

accounts

11

· Invoice reference – the reference number

for the invoice

· Invoice amount – the value of the invoice

(mandatory)

· Invoice date – the date of the invoice

· Due date – the date the invoice is due to be

paid

· Posted by – the name of the user who

posted the invoice

· Posted time – the time the invoice was

posted

· Posted date – the date the invoice was

posted

· Transaction type – the transaction type

code

12 Ensure the sum of the „invoice amount‟ column and

ensure this reconciles to the sales ledger control

account balance(s) per the Trial Balance (the sum of

this column can be found on the Section Module

Summary sheet)

C E A

Using the „aging‟ test, age the report by Invoice date

using „Months‟ for the aging bands and the period end

date as the aging reference date.

·         Understand whether invoices that are

old/overdue represent debts at risk of going bad,

and determine if a bad debt provision is required.

14 Using the „Duplicates‟ test look for any duplicate invoice

references, and understand why the same invoice

number has been issued twice

E

Using the „Over Amount‟ test extract any records over a

significant amount.

·         Ensure the balances appear reasonable,

and obtain explanations for each item

16 Using the „Credit balances‟ test extract all records with a

credit balance. Understand the reasons behind these

records, and if significant consider whether they should

be included in Trade Payables

V

Using the „transactions posted on‟ test, extract any

transactions posted on a Saturday or Sunday.

·         Understand whether these are legitimate

transactions that have been posted in the ordinary

course of business, and why they have been

posted on non-working days.

· You can add the “posted by” field to the

pivot table to understand who is posting

transactions on non working days

Using the „transactions posted on specific dates‟ test,

extract any transactions posted on other non-working

days, such as public holidays.

11

13 V

15 AV

17 F

18 F

·         Understand whether these are legitimate

transactions that have been posted in the ordinary

course of business, and why they have been

posted on non-working days.

· You can add the “posted by” field to the

pivot table to understand who is posting

transactions on non working days

Using the „transactions around a specific date‟ test,

extract all transactions posted in the 7 days prior to the

year-end.

·         Select a sample of these items and perform

cut off testing (i.e. ensure that the goods have

shipped/services supplied in the current period)

Using the „transactions posted at specific times‟ test,

extract all transactions posted out of expected working

hours.

·         Understand whether these are legitimate

transactions that have been posted in the ordinary

course of business, and why they have been

posted outside normal working hours.

· You can add the “posted by” field to the

pivot table to understand who is posting

transactions outside business hours

Using the „transactions by user‟ test, produce a

summary of transactions by user.

·         Review the list of users for any that you

would not expect to be posting to the sales ledger.

Understand whether these transactions are

legitimate and do not represent fraud or error.

Using the „rounded transactions‟ test, extract

transactions rounded to 1,000, 10,000, 100,000, or

1,000,000 as appropriate considering materiality.

·         Understand whether these are legitimate

transactions and do not represent fraud or error.

23 Review the column statistics report, and ensure that the

source data appears reasonable (i.e. no text entries in

numeric columns, blanks in date columns, etc)

Other Trade Receivables Listing Tests

Using the „Exception report‟ tool extract from a trade

receivables transactions listing as at the current date

(i.e. after the period-end) those transactions that were

dated before year-end.

·         Review the level of uncollected balances

and determine whether there are any aged

amounts that should be provided against

18 F

19 C E

20 F

21 F

22 F

24 V

25 Use Join 2 Sheets to join an after date listing with the

period end listing (by invoice number, matches only

from both sheets). Investigate matches to understand

why they are still on the ledger

V

Obtain a listing of after-date credit notes, and use Join 2

Sheets to join this (by invoice number) to the year end

listing (matches only from both sheets).

E

·         Review significant credit notes to ensure

they are appropriate and do not represent false

sales

F

Use the „Same Same Different‟ test (within the Duplicate

tool) to look for records where the amount and invoice

number is the same, but the customer is different.

·         Investigate any records matching these

criteria and understand why two different

customers have issued the same invoice

Obtain a listing of all invoices issued during the period

and run the „Gaps‟ tool

C E A

·         If gaps exist in the invoice numbers issued,

understand why these gaps occur

F

29 Review write-offs during the year to ensure they‟ve been

authorized

C

30 Perform Benford‟s testing on the listing to ensure that

the data appears to be natural

F

28

26

27 E F

Audit ProgramTrade Receivables

Time Date Date Checked

Spent Expected Finished Remarks By: