Question

You are out at an audit client's headquarters in Los Angeles, California. The client is a well-known television psychic. The client company does television advertising using a person who speaks with a Jamaican accent (but she is really from the U.S. and has never been to Jamaica, mon). The pitch is that she knows all and can tell you your future. For example, she tells young women who call that they might have children, but probably not more than four. When her caller ID function shows the name of a prison, she says that she thinks the caller might have done something bad that he is having regrets about. "Wow, how did you know that?" And when the caller says he or she is middle aged, she says that the person might have some health problems sometime during the next several years. As you look at the operation, you see the videotapes used by the operation to get people to call in. The company uses an 800 number to get people to call in, but then transfers the callers to a 900 number while they are on hold. An employee gets the individual's name, address, and credit card number, and informs the caller that he or she will be charged a certain fee per minute. This fee varies, based on the online credit report the employee calls up while the caller is still on the line. For example, a low-income individual might be quoted a fee of $1.99 per minute while a high-income individual might be quoted a fee of $3.50 per minute. Required: The in-charge accountant wants you to ignore the prior year's working papers and ignore the prior year's audit program. a. Tell him how you intend to approach the audit of sales and accounts receivable. b. What do you want to test? c. How will you test it?

Answer 1

Answer :-

a ) :-

Review of offers :-

• Review of offers can be begun with picking an example of call points of interest amid the period.
• After this it must be seen that whether the equivalent has been entered in the business enroll .
• At that point, it has likewise to be seen that rate is properly charged according to client pay gather .

Review of receivables :-

It very well may be done in two different ways :-

• By sending affirmation letters to the clients to affirm their individual adjusts. This should be possible for vast clients on test premise .
• By taking up the past inspected client number and altering for exchanges amid the period.

b ) :-

Testing :

• whether suitable rate has been charged to proper client .
• Regardless of whether rate every moment * number of minutes is equivalent to the deals .
• Regardless of whether appropriate affirmation letters are sent to clients .

c ) :-

The most effective method to test :-

• By taking an example of a few exchanges from the entire rundown of exchanges and testing the equivalent .
• By getting test clients from rundown of clients and testing the equivalent.