As the auditor of CK Ltd., you did positive accounts receivable confirmations as of the year-end...
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As the auditor of CK Ltd., you did positive accounts receivable confirmations as of the year-end date, April 30, 2013. You selected your sample from a list of customers and their balances prepared by the controller. You compared the items on the list to the accounts receivable sub-ledger. There were no discrepancies. Most of the confirmations have been returned and you have cleared them. These are the outstanding items that you are working on: a. The confirmation returned by TT Stores said, "We have not paid the April 25, 2013 invoice yet because they charged us double the going price. When we called them about it, they said that it was a computer error." b. The confirmation returned by CW Inc. said, "We didn't pay the April invoice because they sent us the wrong style. Our purchase order clearly stated 'Style 4114' and they sent us 'Style 4144. We sent the order back to them on April 27." c. The confirmation returned by YS Ltd. said, "We mailed in our payment on April 30, 2013 because we had to finish our year end, too." d. The confirmation returned by MM Inc. said, "The amount is correct. These are consignment goods and we will remit payment when we sell the goods." e. The confirmation returned by ST Co. said, "We never received these goods. The last order that we received from them was in January, and we paid that invoice in February. We owe nothing." f. The confirmation returned by MT Ltd. said, "The $5,000 balance is a deposit. This amount will be applied against the final lease payment due in 2014." Required: For each of the above confirmation responses, describe in detail the follow-up procedures that you would undertake. Be specific in describing your follow-up procedures. As the auditor of CK Ltd., you did positive accounts receivable confirmations as of the year-end date, April 30, 2013. You selected your sample from a list of customers and their balances prepared by the controller. You compared the items on the list to the accounts receivable sub-ledger. There were no discrepancies. Most of the confirmations have been returned and you have cleared them. These are the outstanding items that you are working on: a. The confirmation returned by TT Stores said, "We have not paid the April 25, 2013 invoice yet because they charged us double the going price. When we called them about it, they said that it was a computer error." b. The confirmation returned by CW Inc. said, "We didn't pay the April invoice because they sent us the wrong style. Our purchase order clearly stated 'Style 4114' and they sent us 'Style 4144. We sent the order back to them on April 27." c. The confirmation returned by YS Ltd. said, "We mailed in our payment on April 30, 2013 because we had to finish our year end, too." d. The confirmation returned by MM Inc. said, "The amount is correct. These are consignment goods and we will remit payment when we sell the goods." e. The confirmation returned by ST Co. said, "We never received these goods. The last order that we received from them was in January, and we paid that invoice in February. We owe nothing." f. The confirmation returned by MT Ltd. said, "The $5,000 balance is a deposit. This amount will be applied against the final lease payment due in 2014." Required: For each of the above confirmation responses, describe in detail the follow-up procedures that you would undertake. Be specific in describing your follow-up procedures.
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a TT Stores Obtain a copy of the invoice in question from TT Stores to verify the billing details Contact the supplier to request an explanation regarding the double billing issue Obtain any documenta... View the full answer
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
Posted Date:
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