You are the senior auditor in-charge on the audit engagement for JA Tire Manufacturing for the year ended December 31, 2019. You are responsible for performing risk assessment procedures related to the sales cycle. JA Tire has four sales divisions within the U.S. and sells primarily to large tire companies with regional warehouses that subsequently distribute to local retailers.

Part I: IDENTIFYING AUDIT OBJECTIVES

(40 POINTS)

The following (1 through 16) are the balance-related and transaction-related audit objectives.

Balance-Related Audit Objectives	Transaction-Related Audit Objectives
Existence Completeness Accuracy Cutoff Detail tie-in Realizable value Classification Rights and obligations Presentation	Occurrence Completeness Accuracy Classification Timing Posting and summarization Presentation

Required

Identify the specific audit objective (1 through 16) that each of the following specific audit procedures (a. through l.) satisfies in the audit of sales, accounts receivable, and cash receipts for fiscal year ended December 31, 2019 For JA Tire Manufacturing.

Examine a sample of electronic sales invoices to determine whether each order has been shipped, as evidenced by a shipping document number.

Add all customer balances (ANYTHING NOT DUE UNTIL 2020) in the accounts receivable trial balance and agree the amount to the general ledger.

For a sample of sales transactions selected from the sales journal, verify that the amount of the transaction has been recorded in the correct customer account in the accounts receivable sub ledger.

Inquire of the client whether any accounts receivable balances have been pledged as collateral on long-term debt and determine whether all required information is included in the footnote description for long-term debt.

For a sample of shipping documents selected from shipping records, trace each shipping document to a transaction recorded in the sales journal.

Discuss with credit department personnel the likelihood of collection of all accounts as of December 31, 2019, with a balance greater than $100,000 and greater than 90 days old as of year-end.

Examine sales invoices for the last five sales transactions recorded in the sales journal in 2019 and examine shipping documents to determine they are recorded in the correct period.

For a sample of customer accounts receivable balances at December 31, 2019, examine subsequent cash receipts in January 2020 to determine whether the customer paid the balance due.

Determine whether risks related to accounts receivable are clearly and adequately disclosed.

Use EXCEL to total sales in the sales journal for the month of July and trace postings to the general ledger.

Send letters to a sample of accounts receivable customers to verify whether they have an outstanding balance at December 31, 2019.

Determine whether long-term receivables and related party receivables are reported separately in the financial statements.

AUDIT PROCEDURE	BALANCE-RELATED AUDIT OBJECTIVE	TRANSACTION RELATED AUDIT OBJECTIVE