The following is a copy of the auditor’s working paper relating to the roll forward procedures for accounts receivable for the client New Millennium Ecoproducts. 

Required 

(a) When are roll forward procedures used? Why are they useful in testing accounts receivable and revenue? 

(b) The details of the test show that credit note 2648 was highlighted as an unusual transaction. The credit note was used as the basis for a credit to the accounts receivable for Brighter Bobs. Why is an auditor interested in credits to accounts receivable when testing revenue?

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CLIENT: New Millennium Ecoproducts 12/31/2016 Period end: EY $ 000 E03.1-ROLL FORWARD PROCEDURES (rely on controls) Currency/unit: Reference ЕОЗ.1 Additional items/transactions in the roll forward period selected for testing Item/transaction selected for testing Amount TM/Ref Rationale for testing Date Comments 11/01/2016 (500) accrual for a credit note to Credit note 2648 unusual transaction customer Brighter Bobs because of defects found in goods supplied, refer invoice 785 553 12/01/2016 250 reversal of the accrued credit notes Other adjustment 254 unusual transaction as a result of final agreement with customer Grey Ghosts (A) Key to audit tickmarks: v agreed to voucher including authorization from chief accountant A OK amount corresponds to written agreement dated 12/01/2016