Can someone please help me answer these questions Part B Aud

Can someone please help me answer these questions?

Part B: Auditing Revenue Processes and Completing the Audit

For each of the following problems, provide an audit procedure that would have identi?ed the problem.

1.    Management’s estimate for the adjustment to allowance for doubtful accounts is inadequate.

2.    A cash payment received for credit toward an account receivable was deposited in the bank in the current period but was not posted to the accounts receivable record, trial balance, or general ledger until the subsequent period.

3.    For a brief period, sales are recorded using an outdated price list with amounts that were below the current prices. The transactions were recorded accurately based on the price list used. Management is not aware that the problem occurred.

4.    Cashiers are regularly taking money received for the exact amounts of sales and not recording the sales. Customers do not ask for receipts.

5.    False sales are being recorded by management at or near year-end and are posted as accounts receivable.

6.    Sales on account for services that take place in the ?rst two days of the subsequent year have been posted as sales occurring in the audit year.

Solution

.1Management’s estimate for the adjustment to allowance for doubtful accounts is inadequate.

Check the actual bad debts for the lat three years. Calculate the bad debts to sales ratio for the last three years. Compare the average of last three years bad debt /sales ratio with the current years allowance for doubtful debt to sales ratio. If the current years ratio is equal to or higher than average of last three years ratio, then the allowance is adequate

2.    A cash payment received for credit toward an account receivable was deposited in the bank in the current period but was not posted to the accounts receivable record, trial balance, or general ledger until the subsequent period.

Check the bank reconciliation statement to ensure that all deposits are posted in the account and corresponding entry is made in the accounts receivable

3.    For a brief period, sales are recorded using an outdated price list with amounts that were below the current prices. The transactions were recorded accurately based on the price list used. Management is not aware that the problem occurred.

Get updated price lists and compare sales figures with the updated pricelists. Check invoices to ensure invoice figures and price lists figures match

4.    Cashiers are regularly taking money received for the exact amounts of sales and not recording the sales. Customers do not ask for receipts.

Check physical inventory records. Take physical inventory at random. If sales are not recorded , physical inventory will show lower than the book inventory. Physical inventory should match with (Beginning inventory+Purchase –Sales). If sales are not recorded inventory in books will be higher than physical inventory

5.    False sales are being recorded by management at or near year-end and are posted as accounts receivable.

Get confirmation of accounts receivable from the customers. Verify physical inventory at year end. If false sales are recorded, the physical inventory will show a higher figure than the book amount

6.    Sales on account for services that take place in the ?rst two days of the subsequent year have been posted as sales occurring in the audit year.

Get confirmation from customers. Check whether physical inventory as on year end matches with the book amount.

If the goods are despatched through trucks, the transportation records can be matched with invoice records to verify whether sales of later year are included in the reporting year