You have been assigned to audit the sales and accounts receivable balances of Coppero Engineering Ltd, for the year ended 30 June 2015. Coppero Engineering is a major manufacturer of steel parts and fixtures for other manufacturers in the engineering field. The interim work was undertaken in April 2015 and tests indicated that internal controls over sales and accounts receivable are effective and that therefore control risks are acceptable.

You observe that credit sales are made to a group of 2500 active customers, located in Australia and South-East Asia. Approximately 30% of the customers represent 70% of the balances, and although most of these customers are in Australia, a number are also based in Hong Kong, Singapore and Indonesia. The sales made into South-East Asia are invoiced in Australian dollars and you note that the value of the Australian dollar has escalated by 30% in recent months. Total of the accounts receivable balances at 30 June is \($95\) million and the current allowance for doubtful debts is \($500,000\) .

Sales and receipts are recorded on the company's computerised accounting system, which simultaneously updates the accounts receivable balances and sales and cash receipts transactions journals on a daily basis. On a weekly basis, an aged trial balance is generated, which is reviewed by the credit manager for slow-paying accounts. Follow-up action is then taken as necessary. Sales returns and bad debt write-offs are processed and summarised weekly and any write-offs have to be approved by the chief finance officer, based on the recommendations of the credit manager.

Documents to support these write-offs are kept on file.

After the end of the reporting period, the rising Australian dollar and a financial crisis in two of the major Asian markets have caused some concern for the credit manager, who has recently joined the client after a number of years in the retailing industry. Also, the rising trend towards online purchases from overseas and a slowing economy have affected sales growth in the Australian market.

Required

You are asked to prepare an audit program to test Coppero Engineering's year-end accounts receivable. You are required to include in your program specific audit objectives you can test using the audit firm's new generalised audit software package. Your manager is particularly worried about the possible negative effects on the collectability of accounts receivable because of the Asian financial crisis, the rising dollar and the slowing Australian economy.