/mail/u/1/?tab=wm#inbox?projector=1 SOURCE: AUDIT 1997. EXAMS 3. QUESTION Number 30 points - upprustnately 54 minutes) Miller, CPA, is engaged to make the financial statements of Superior Wholesaling for the year ended December 31, 1996. Miller obained and documented an understanding of Superio's Internal control relating to accounts rostle and essed control is relating to accounts receivable at the maximum level. Miller requested and obtained from Superior an aged accounts receivable schedule listing the total amount owed by each customers of December 31, 1996, and sent positive confirmation requests 10 a sumple of the customers. Subsequently, Miller tested the accuracy of the aged accounts receivable schedule. Miller has asked Adler, the staff assigned to the engagement, to follow up on the eight returned confirmations that appear on the following two pages. Assume that each emfirmation is material if the potential intement is projected to the population. Required: .. Describe the procedere(s), if any, that Adler should perform to resolve each of the estat confirmation that were returned. Assume that Superior will record any necessary adjmiting entries and that Adler will verify thu dey are appropriate b. Assume that Miller sent second requests for accounts receivable balances Initially selected for confirmation for which no responses were received. Describe the alternative muhtative procedures that Miller should consider applying to the accounts receivable selected for confirmation for which no responses were received to Miller's second request. Ansure that these accounts receivable in the aggregate, when projected misstatements to the population, would affect Miller's decision about whether the financial statements are materially c. In addition to performing the confirmation procedures and alternative procedures described in requirements a and band the procedures described in the first paragraph above, what additional substantive procedures should Miller comidor performing complete the audit of Superior's accounts receivable and relund lowance Asume that all accounts receivable are trade receivables. SOURCE: AUDIT 1997 EXAMS #3 - QUESTION Page 1 of 3 Number 3 (20 points - approximately 54 minutes) Miller, CPA, is engaged to audit the financial statements of Superior Wholesaling for the year ended December 31, 1996. Miller obtained and documented an understanding of Superior's internal control relating to accounts receivable and assessed control risk relating to accounts receivable at the maximum level. Miller requested and obtained from Superior an aged accounts receivable schedule listing the total amount owed by each customer as of December 31, 1996, and sent positive confirmation requests 10 a sample of the customers. Subsequently, Miller tested the accuracy of the aged accounts receivable schedule. Miller has asked Adler, the staff assistant assigned to the engagement, to follow up on the eight returned confirmations that appear on the following two pages. Assume that each confirmation is material if the potential misstatement is projected to the population. Required: a. Describe the procedure(s), if any, that Adler should perform to resolve each of the eight confirmations that were returned. Assume that Superior will record any necessary adjusting entries and that Adler will verify that they are appropriate. b. Assume that Miller sent second requests for accounts receivable balances initially selected for confirmation for which no responses were received. Describe the alternative substantive procedures that Miller should consider applying to the accounts receivable selected for confirmation for which no responses were received 10 Miller's second requests. Assume that these accounts receivable in the aggregate, when projected as misstatements to the population, would affect Miller's decision about whether the financial statements are materially misstated. c. In addition to performing the confirmation procedures and alternative procedures described in requirements a and b and the procedures described in the first paragraph above, what additional substantive procedures should Miller consider performing to complete the audit of Superior's accounts receivable and related allowances? Assame that all accounts receivable are trade receivables. RI /mail/u/1/?tab=wm#inbox?projector=1 SOURCE: AUDIT 1997. EXAMS 3. QUESTION Number 30 points - upprustnately 54 minutes) Miller, CPA, is engaged to make the financial statements of Superior Wholesaling for the year ended December 31, 1996. Miller obained and documented an understanding of Superio's Internal control relating to accounts rostle and essed control is relating to accounts receivable at the maximum level. Miller requested and obtained from Superior an aged accounts receivable schedule listing the total amount owed by each customers of December 31, 1996, and sent positive confirmation requests 10 a sumple of the customers. Subsequently, Miller tested the accuracy of the aged accounts receivable schedule. Miller has asked Adler, the staff assigned to the engagement, to follow up on the eight returned confirmations that appear on the following two pages. Assume that each emfirmation is material if the potential intement is projected to the population. Required: .. Describe the procedere(s), if any, that Adler should perform to resolve each of the estat confirmation that were returned. Assume that Superior will record any necessary adjmiting entries and that Adler will verify thu dey are appropriate b. Assume that Miller sent second requests for accounts receivable balances Initially selected for confirmation for which no responses were received. Describe the alternative muhtative procedures that Miller should consider applying to the accounts receivable selected for confirmation for which no responses were received to Miller's second request. Ansure that these accounts receivable in the aggregate, when projected misstatements to the population, would affect Miller's decision about whether the financial statements are materially c. In addition to performing the confirmation procedures and alternative procedures described in requirements a and band the procedures described in the first paragraph above, what additional substantive procedures should Miller comidor performing complete the audit of Superior's accounts receivable and relund lowance Asume that all accounts receivable are trade receivables. SOURCE: AUDIT 1997 EXAMS #3 - QUESTION Page 1 of 3 Number 3 (20 points - approximately 54 minutes) Miller, CPA, is engaged to audit the financial statements of Superior Wholesaling for the year ended December 31, 1996. Miller obtained and documented an understanding of Superior's internal control relating to accounts receivable and assessed control risk relating to accounts receivable at the maximum level. Miller requested and obtained from Superior an aged accounts receivable schedule listing the total amount owed by each customer as of December 31, 1996, and sent positive confirmation requests 10 a sample of the customers. Subsequently, Miller tested the accuracy of the aged accounts receivable schedule. Miller has asked Adler, the staff assistant assigned to the engagement, to follow up on the eight returned confirmations that appear on the following two pages. Assume that each confirmation is material if the potential misstatement is projected to the population. Required: a. Describe the procedure(s), if any, that Adler should perform to resolve each of the eight confirmations that were returned. Assume that Superior will record any necessary adjusting entries and that Adler will verify that they are appropriate. b. Assume that Miller sent second requests for accounts receivable balances initially selected for confirmation for which no responses were received. Describe the alternative substantive procedures that Miller should consider applying to the accounts receivable selected for confirmation for which no responses were received 10 Miller's second requests. Assume that these accounts receivable in the aggregate, when projected as misstatements to the population, would affect Miller's decision about whether the financial statements are materially misstated. c. In addition to performing the confirmation procedures and alternative procedures described in requirements a and b and the procedures described in the first paragraph above, what additional substantive procedures should Miller consider performing to complete the audit of Superior's accounts receivable and related allowances? Assame that all accounts receivable are trade receivables. RI