As part of the audit of KC Enterprises, the auditor assessed control risk for the existence and

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As part of the audit of KC Enterprises, the auditor assessed control risk for the existence and valuation assertions related to accounts receivable at the maximum level. Katie, the staff person assigned to the engagement, sent positive confirmation requests to a sample of the company customers based on their balances as of December 31, 2015. For each of the three customers described here, review the relevant confirmation letter and Katie's comments at the bottom of each. Select the procedure that should be followed to clear the exception, if one exists. Choose only one procedure per confirmation. A procedure may be used once, more than once, or not at all.
a.
As part of the audit of KC Enterprises, the auditor

b.

As part of the audit of KC Enterprises, the auditor

c.

As part of the audit of KC Enterprises, the auditor
As part of the audit of KC Enterprises, the auditor

Possible procedures:
1. Not an exception, no adjustment necessary. Determine the sufficiency of allowance for doubtful accounts.
2. Exception noted; propose adjustment and request that the controller post it to the accounting records.
3. Verify by examining subsequent cash collections and/or shipping documents.
4. Review appropriate documentation to verify that additional invoices noted on confirmation pertain to the subsequent year.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For  book-img-for-question

Auditing A Risk Based Approach to Conducting a Quality Audit

ISBN: 978-1305080577

10th edition

Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg

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