Your client is BigC Ltd, a large private firm with offices in all major cities of Australia. BigC Ltd specialises in selling concentrated fruit juices to Australian and overseas buyers. This is the first year your firm will perform the audit. You are currently completing the planning work for the audit of trade debtors for the year ending 30 June 2015, and have gathered the following information.

1. The Melbourne office recently won a large contract to supply an overseas department store chain with concentrated orange juice.

2. For the month of January, the Adelaide office ran a sales promotion that allowed new customers double the normal credit terms of 30 days. Several new large customers took advantage of this offer.

3. The Darwin office has been experiencing a higher than usual level of sales returns owing to a would growth being discovered in a batch of guava juice.

You have calculated the receivables (or debtors) turnover ratio and receivables to total assets ratio for each of the branch offices, as shown in the tables below.

Required

a. List the questions you would ask of management in relation to the accounts receivable of each of the branch offices.

b. Describe additional audit work you would perform to satisfy yourself that accounts receivable were fairly stated.

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Office Receivables (or debtors) turnover ratio 8 months to February 2015 12 months to June 2014 12 months to June 2013 Sydney 8.0 9.2 10.1 Melbourne 7.5 9.1 9.2 Hobart 5.2 6.0 7.1 Adelaide 10.1 8.5 9.5 Perth 8.8 9.0 9.0 Darwin 8.5 7.9 7.1 Brisbane 5.9 6.0 6.0