An auditor is conducting an examination of the financial statements of a wholesale appliance distributor. The distributor supplies appliances to hundreds of individual customirs in th: metropolitan area. The distributor maintains detail accounts receivable records on a computer disk. At the end of each business day, the customer account file is updated. Each customer record in the computer file contains the following data:

1. Customer account number.

2. Address.

3. Open (unpaid) invoices at the beginning of the month, br invoice number and date.

4. Sales during the current month, by invoice number and date.

5. Individual cash receipts during the current month.

6. Date of last sale.

7. Date of last cash receipt.

8. Total sales during the year.

The auditor is planning to confirm selected accounts receivable as of the end of the current month. The auditor will have available a computer tape of the data on the accounts receivable master file on the date that the company regularly sends monthly statements to its customers. The auditor also has a general purpose computer software package.

Required:

The auditor is planning to perform the customary audit procedures involved in the verification of accounts receivable. Identify the basic procedures to be performed and describe how the use of the general purpose software package and the tape of the accounts receivable file data might be helpful to the auditor in performing such auditing procedures. Organize your answer as follows:

Transcribed Image Text:

Basic Receivable Auditing Procedure How General Purpose Computer Software Package and Tape of Accounts Receivable Data Might Be Helpful