The auditor is considering confirming zero-balance accounts from the auditees accounts receivable sub-ledger to provide evidence concerning

Question:

The auditor is considering confirming zero-balance accounts from the auditee’s sub-ledger to provide evidence concerning the completeness assertion for accounts receivables and sales.

Required:
a. What are the advantages and limitations of this procedure?
b. How would the decision to use this procedure relate to the auditor’s control assessment? In particular, discuss the kinds of controls the auditee would be expected to have and the procedures the auditor could use to test them.

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...