Down Market Department Stores PLC sell a high proportion of their merchandise on hire purchase (HP).

The system for dealing with HP sales is highly organized and well controlled. The HP receivables ledger is kept on a specially designed computer system. The HP receivables of the company at 30 September 2X10 appear in the accounts at £4.6 million out of gross assets of £19.3 million.

Questions:-

1. What assertions are the directors implying in stating the HP receivables at £4.6 million?
2. What possible misstatements could occur?
3. What varieties of evidence may be collected re this current asset?
4. What basic techniques for collecting evidence can be applied to the item?