Auditing the Revenue Process You have been assigned to the first audit of the Black Clover company for the year ending March 31, 2019 Accounts receivable were confirmed on December 31, 2018, and at that date, the receivables consisted of approximately 200 accounts with balances totaling $956,750 Fifty of these accounts, with balances totaling $650,725, were selected for confirmation All but 10 of the confirmation requests have been returned 24 were returned without any exceptions, 6 had minor dierences that have been cleared satisfactorily, and 10 confirmations had the following information and comments We are sorry, but we cannot answer your request for confirmation of our account as the Kingdom Company uses an accounts payable voucher system and can only confirm individual invoices The balance of $1,050 was paid on December 28, 2018 The balance of $7,750 was paid on January 5, 2019 The balance of $2,975 was paid on December 13, 2018 We do not owe you anything on December 31, 2018, as the goods, represented by your invoice date December 30, 2018, number 25050, in the amount of $11,550, were received on January 5, 2019, on FOB destination terms An advance payment of $2,500 made by us in November 2018 should cover the two invoices totaling $1,350 shown on the statement attached This confirmation was returned as undeliverable by the post oce We are contesting the propriety of this $12,525 charge We think the charge is excessive We do not owe this balance as our agreement with the company allows us to return any unsold goods without penalty Amount okay As the goods have been shipped to us on consignment, we will remit payment upon selling the goods Your credit memo dated December 5, 2018, in the amount of $440 cancels the balance above Required Indicate which of these confirmation responses likely represent timing dierences Which of the 10 confirmation repossess likely represents a misstatement Explain why the response indicates a misstatement For each of the 10 confirmation responses, indicate the procedures you would perform to determine whether the exception is a misstatement or has been appropriately recorded by the client

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Auditing the Revenue Process You have been assigned to the first audit of the Black Clover company for the year ending March 31, 2019. Accounts

Auditing the Revenue Process

You have been assigned to the first audit of the Black Clover company for the year ending March 31, 2019. Accounts receivable were confirmed on December 31, 2018, and at that date, the receivables consisted of approximately 200 accounts with balances totaling $956,750. Fifty of these accounts, with balances totaling $650,725, were selected for confirmation. All but 10 of the confirmation requests have been returned; 24 were returned without any exceptions, 6 had minor dierences that have been cleared satisfactorily, and 10 confirmations had the following information and comments:

We are sorry, but we cannot answer your request for confirmation of our account as the Kingdom Company uses an accounts payable voucher system and can only confirm individual invoices.
The balance of $1,050 was paid on December 28, 2018.
The balance of $7,750 was paid on January 5, 2019.
The balance of $2,975 was paid on December 13, 2018.
We do not owe you anything on December 31, 2018, as the goods, represented by your invoice date December 30, 2018, number 25050, in the amount of $11,550, were received on January 5, 2019, on FOB destination terms.
An advance payment of $2,500 made by us in November 2018 should cover the two invoices totaling $1,350 shown on the statement attached.
This confirmation was returned as undeliverable by the post oce.
We are contesting the propriety of this $12,525 charge. We think the charge is excessive.
We do not owe this balance as our agreement with the company allows us to return any unsold goods without penalty. Amount okay. As the goods have been shipped to us on consignment, we will remit payment upon selling the goods.
Your credit memo dated December 5, 2018, in the amount of $440 cancels the balance above.

Required

Indicate which of these confirmation responses likely represent timing dierences
Which of the 10 confirmation repossess likely represents a misstatement? Explain why the response indicates a misstatement.
For each of the 10 confirmation responses, indicate the procedures you would perform to determine whether the exception is a misstatement or has been appropriately recorded by the client.