Your evaluation of a statistical sample indicates that there may be a material misstatement in the population.

Question:

Your evaluation of a statistical sample indicates that there may be a material misstatement in the population. Upon analyzing the detected misstatements, a common cause was discovered: most of the misstatements were caused by the failure to record sales returns on a timely basis. That is, sales were returned prior to December 31 but were recorded as January returns because the person who normally records sales returns was on vacation at year end.

Required
How should the auditor proceed to determine whether and sales returns and allowances contain a material misstatement?

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...