When an in-charge auditor is considering whether to let a junior accountant take over running a part of the audit, the in-charge sometimes wants to find out whether the junior actually understands the purpose of auditing that portion of the client company. Consequently, he may tell the junior to ignore the prior year's work papers and the accounting firm's already-existing audit program, and just tell the in-charge what he is concerned about auditing, what he is looking for, and what approach he intends to take.

You are working on the audit engagement of a wholesaler. The wholesaler buys from several manufacturers, brings the goods into its own warehouse, then fulfills orders from a number of retailers who buy from the wholesaler. There are ten accounts which are really big and are handled by the national sales manager himself. There are thirty-one accounts which are handled by salespeople who have territories where they make sure to collectively go visit these thirty-one customers. Additionally, there are about five hundred to six hundred small accounts which buy occasionally. The client company has inside salespeople occasionally contact them by telephone, and in between those times they either phone or fax their orders in.

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Assume that you are in such a position with respect to the in-charge accountant on the audit engagement. The incharge tells you to ignore the prior year's work papers and ignore the firm's audit program; instead, tell him about the audit of this client company's accounts receivable. What are you interested in, what do you intend to test, and how do you intend to test it?