Question

(12.7.)

You ask your audit assistant to carry out a review of after-date receipts from credit customers. Explain to them the reason for such a review and show how it should be performed. What kind of conclusion might they be able to form after carrying such a review?

Answer 1

Review of after date receipts from Credit customers

Reason: Auditors carry out the review of after date receipts from credit customers when they check accounts receivable.  Auditors check that the accounts receivable are recoverable, there are bona fide amounts at issue due from third parties and revenue pertaining to the same are recorded in the books in the correct period.

Verification of after date receipts:

After-date receipts means funds received after the balance sheet date. Auditors will look at money received and their allocation. It is a substantive procedure to check balances lying on the balance sheet date. Based on the materiality factor, the auditor will check the samples of such after

Analyzing such cash receipts received after the balance sheet date will confirm the value and recoverability of the accounts receivable as at the balance sheet date. Auditors perform various test of controls as well as substantive procedures to arrive at the conclusion of any financial statement area. The conclusion we arrive at is basically to get a comfort on the accounts receivable figure.