For this exercise, your client, Bright IDEAs Inc., has provided you with data for two related files, a listing of
For this exercise, your client, Bright IDEAs Inc., has provided you with data for two related files, a listing of sales invoices, and a listing of customers with credit limits. To test whether credit authorization controls are in place, the auditor must complete a series of related steps:
1. Import the client's database of sales invoices (pp. 28-45 of the IDEA Workbook).
2. Summarize the Accounts Receivable balance by customer (pp. 67-79 of the IDEA Workbook).
3. Import the client's customer credit limit data into IDEA (pp. 70-79 of the IDEA Workbook).
4. Join the Accounts Receivable balances by customer with the credit limit data (pp. 80-87 of the IDEA Workbook).
5. Extract customers with exceeded credit limits (pp. 88-89).
Required Data available on Connect
Complete the preceding steps and answer the following questions:
a. How many customers were granted credit with no indication that they had any credit limit assigned to them?
b. How many customers exceeded their credit limit?
c. What effects would the findings in parts (a) and (b) have on the auditor's assessment of the risk of material misstatement? What accounts and assertions are most likely influenced by these findings?
Applying IDEA to the Revenue Cycle-Elm Manufacturing Company
Exercises 7.78, 7.79, and 7.80 require the application of IDEA in the revenue cycle audit. Elm Manufacturing Company (ELM) is a small manufacturer of backpacks located in Rochelle, Illinois. You have access to ELM's electronic records on Connect. The appropriate file for these exercises is the Sales 2017 - 4th Q dataset. Detailed information about ELM, instructions for accessing datasets, and a data directory for data sets can be found on Connect?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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