Emma Maltz has been appointed as audit senior of the accounts receivable area in the audit of Fantastic Cruises, a company operating leisure cruises from ports in eastern Canada. Fantastic Cruises sells cruises to individuals (via its website) and to travel agents for resale to customers. All cruises are paid in advance, with a 10 percent deposit on booking, and the remainder collected at least four weeks prior to sailing. Travel agents collect money from their customers, deduct their commission, and forward the remainder to the cruise company before the deadline. Emma has made a preliminary assessment that the client is a low control risk and plans to conduct extensive testing of controls in the accounts receivable area to support her assessment.
Required
(a) What is Emma's objective in testing of controls over accounts receivable?
(b) Assuming Emma achieves her objective, discuss the implications for the nature, timing, and extent of substantive testing of accounts receivable.