You are the auditor of Petite Ltd, a small company. In order to reduce the company's administrative
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You are the auditor of Petite Ltd, a small company. In order to reduce the company's administrative costs, the financial director proposes transferring all the Receivables and Payables Ledger processing to a computer services company. Batches of invoices will be sent weekly to the company which will process them and send them back together with a printed transaction report. The company will also produce a monthly list of balances and an aged debtors listing. The Receivables and Payables Ledger programmers are the property of the bureau and Petite's auditors may not access them in any way.
Required:
(a) What problems might this present to the auditor?
(b) How may the auditor overcome the problems you have listed in (a) above?
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a Transferring the processing of Receivables and Payables Ledger to a computer services company while potentially reducing administrative costs can pose several challenges to the auditor Some of the p...View the full answer
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Gabriela Rosalía Castro
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