Question

Discuss the audit procedures performed when testing the detail tie-in objective for accounts receivable, and explain why this objective is ordinarily tested before any other objectives for accounts receivable.

Answer 1

Solution:-

Accounts Receivables is the amount of money or other receivables which are due to a company/ firm for the goods or services supplied or delivered but for which the customers have not yet paid for. Accounts receivable refers to the outstanding invoices a company has or the money clients owe the company.  Accounts receivables show a time of credit given by a company and normally have terms that require payments due within a relatively short time period, ranging from a few days to a fiscal or calendar year depending upon the terms of the contract of the company.

So while we are testing the tie-in objective for accounts receivables, we will check the total column and other columns showing the aging (which is how many days have been passed since the accounts receivables have become due for payment) on the aged TB (Trial Balance) are to be footed, and then sum of the same is compared with that of general ledger.

Also additionally a sample of single individual balances on the aged TB (trial balance) must be discovered and traced to supporting evidences and documents to verify the audit procedures regarding the customer's name , amount of balance due by him, and number of days for which the amount has been due. Such type of tests are generally done before any other tests so as to assure  the auditor that the population (the documents or evidences checked)  being tested matches with that of the general ledger and also with the Accounts Receivables Master File. So in the above mentioned way we can conclude that tie- in objective for accounts receivable will be ordinarily tested before any other objectives for accounts receivables.

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