Question

Suppose that the accounting manager of a firm you are auditing is suspected of manipulating sales and collection transactions to make earnings and receivable payments look higher than they are. What kinds of evidence will your audit look for? Suppose that this accounting manager wanted sales to appear lower in order to reduce tax expenses. What kinds of evidence will your audit look for in this case?

Answer 1

The sales might be suppressed by accounting manager to demonstrate a lower taxable income keeping in mind the end goal to lessen a tax liability. Manipulating sales/turnover are illicit and unlawful wellsprings of income, in this manner it is essential that auditor should check altogether and look for evidences:

*Credit sales ought to be contrast and certain points of interest in the invoices, for example, the demand, the name, the sum, and so on with those gave in the Sales Book

*Cancelled invoices should be checked with the duplicate of the invoice.

*In request to affirm the accuracy of borrower balance, the auditor may send Statements of Accounts to the customers and take an affirmation

*Sales are not overlooked from being recorded in the Sales Book.

*Asset deal isn't considered as normal deal

*Check the entries from the Sales Returns Book to the Sales Returns Accounts and Customer Ledger. The merchandise, which are returned by the customers, are incorporated into the end stock at market price or cost price whichever less is.