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During the audit of Solar Technologies, Inc., the auditors sent confirmation requests to customers whose accounts...

During the audit of Solar Technologies, Inc., the auditors sent confirmation requests to customers whose accounts had been written off as uncollectible during the year under audit. An executive of Solar protested, saying, “You people should be verifying that the receivables on thebooks are collectible. We know the ones we wrote off are no good.” a. What purpose, if any, is served by this audit procedure? b. Does the Solar executive’s statement suggest some misunderstanding of audit objectives? Explain

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Answer :-

(a) :-

  • At the point when evaluates sent affirmation demand to indebted individuals whose records receivables were recognized as noncollectable, at that point he/she ought to establish that receivables were great when they were at first recorded in the record.
  • Examiner ought to likewise discover that the records were not met and the returns stolen.
  • For some situation, it might happen that invented records receivable have been produced to conceal a lack.
  • At last these invented records ought to be arranged. Imaginary records might be composed off by indicating them as noncollectable.

b):-

  • The sun based official appears to trust that evaluates are predominantly worried about the gather capacity or valuation of notes and records receivable.
  • As a matter of fact, the primary motivation behind the affirmation procedure is to build up that receivable are legitimate or honest to goodness and that the client exist.
  • The other review systems likewise are pursued to decide the best possible valuation of records or notes receivable.

ekkarill92 answered 1 year ago
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