Question

Assume you were the auditor for a company which asserted it had Accounts Receivable and Cash. What sort of audit evidence would you want and from where?

Answer 1

Since the both account receivable & Cash are very important for the organisation to be in accoradance with threir policy regarding it, thus the auditor should check policy ragarding it :

Whether A/c receivable are shown in financials as per policy made which gives full inforamation to the users of financial statement.

Whether credit terms of A/c receivable are followed, if credit terms not followed then whether properly follow up is done that why this payment has not been made by the debtor.If there is sufficient about the non payment whether the same has been provided in the books.

Whether person authorised to make the account/ Financials & the person handling cash are different , if not then their more chances that misuse & misappropriation of cash, thus have to be apply more professional skeptecism while doing this.

Scrutnise the transactions made during the year based on sample collected.

Whether minimum balance as per policy is kept during the year & if their is excess money whether the same has been invested to earn interest.

Take written representation letter from maangment asserting both.

Check/Ask whether cash forging case or any unique transancation which can grab the auditor attention

Read the internal auditor report.

Whether all petty incomes & petty expense have been considered.

All these can be checked by auditor, if has is in want of any information then it can be collected from the management.