Objective: This project is designed to help students understand the link between financial statement assertions and audit evidence, and to develop a good understanding of the different types of audit evidence available to the auditorincluding analytical procedures. It also introduces inexperienced students to some basic auditing procedures and audit documentation.

Part 1:Below is a simplified audit program for Accounts Receivable for Earthwear. Complete each procedure and sign off that you have completed it, indicating whether the test was OK or not. Then describe the evidence type and identify the assertion for which you believe the evidence is most relevant. For procedures that require a sample, select at least two (2) samples.

Submit your WORD file containing all of Part 1 to the Canvas Project 3 Submission.

Procedure (Evidence)	Completed by	OK	Not OK	Evidence Type	Assertion
1. Discuss with client personnel whether the A/R balance inappropriately contains any interest-bearing notes from customers, or any receivables from employees.	CL	Per Phil Morrison, AR Manager, the A/R balance does not contain any interest-bearing notes from customers or any receivables from employees.		Inquiry	Classification
2. Foot several accounts in the A/R subsidiary ledger and agree the total from the subsidiary ledger to the general ledger.
3. Select a sample of customer accounts from the A/R subsidiary ledger and confirm the 12/31/22 balances directly with customers.
4. Agree a sample of credit sales transactions from the A/R subsidiary ledger to the sales journal and vouch to related shipping documents and invoices. (you only have access to December documents, so select your sample from the population of December transactions)
5. Select a sample of shipping documents representing credit sales during the year and trace them into the sales journal and A/R subsidiary ledger.
6. Select a sample of credit sales transactions during the last week of 2022 from the sales journal and trace to related shipping documents and invoices noting whether they are recorded in correct period.
7. Foot the A/R trial balance/aging and agree the total A/R balance to the general ledger.
8. Trace a sample of individual customer accounts from the A/R subsidiary ledger to the A/R trial balance/aging noting correct aging categories.
9. Discuss with the client personnel their method for computing allowance for doubtful accounts to determine reasonableness. Discuss the collectability of any large accounts 90 day past due.
10. Recalculate the allowance for doubtful accounts.
11. Discuss with client whether any of the receivables listed in the accounts receivable subsidiary ledger have been factored or sold.
12. Review the presentation of A/R in the financial statements and the footnotes to make sure it is clear and appropriate. Also, make sure the method of determining the allowance for doubtful accounts is disclosed in the footnotes.