ACL Case
To: Dr. Brooks
From: Team 3
Date: September 24, 2014
Objective: ACL Accounts Receivable
Relevant Facts:
The purpose of this case was to develop an audit program by using ACL audit software, and to identify the significance of any findings or audit discrepancies. First, we footed the file to the general ledger. Next, we checked for duplicate invoices to ensure that we did not account for the account receivable more than once. We then proceeded to create an aging schedule to find unpaid invoices over 45 days. In addition, we identified customer balances that were greater than their credit limit of n/45, or for which there were no credit limits. This led us to our next step, where we performed a sales cutoff test that identified Shipments over 261,337. Next, we considered customers were credit balances and determined whether there was a need for reclassification. We concluded our program by selecting a PPS (monetary) sample of unpaid invoices to confirm results. Throughout this process we used a materiality of $500,000 for accounts receivable.
Findings:
After Procedure 1, we discovered 402 records that have a net value of $21,567,378.01 that agrees with our client’s financial statement information. Procedure 2 located one set of duplicates located in the unpaid file, which was invoice 167,189 for $28,003.57, and also in the ship info file with disagreeing shipping numbers. We identified 16 invoices for a total amount of $734,515.27 that is over 45 days old during Procedure 3. Next, we identified seven customer balances that are greater than their credit limits by an alarming $32,363.72. After performing our cutoff testing during procedure 5, we located one cutoff error for $29.256.67 that was not shipped until 2008. Fortunately Procedure 6 proved that there are no customer accounts that have credit balances that need to be considered for reclassification. In conclusion, we have discovered the total of misstatements per the entire population as follows: not material
From: Team 3
Date: September 24, 2014
Objective: ACL Accounts Receivable
Relevant Facts:
The purpose of this case was to develop an audit program by using ACL audit software, and to identify the significance of any findings or audit discrepancies. First, we footed the file to the general ledger. Next, we checked for duplicate invoices to ensure that we did not account for the account receivable more than once. We then proceeded to create an aging schedule to find unpaid invoices over 45 days. In addition, we identified customer balances that were greater than their credit limit of n/45, or for which there were no credit limits. This led us to our next step, where we performed a sales cutoff test that identified Shipments over 261,337. Next, we considered customers were credit balances and determined whether there was a need for reclassification. We concluded our program by selecting a PPS (monetary) sample of unpaid invoices to confirm results. Throughout this process we used a materiality of $500,000 for accounts receivable.
Findings:
After Procedure 1, we discovered 402 records that have a net value of $21,567,378.01 that agrees with our client’s financial statement information. Procedure 2 located one set of duplicates located in the unpaid file, which was invoice 167,189 for $28,003.57, and also in the ship info file with disagreeing shipping numbers. We identified 16 invoices for a total amount of $734,515.27 that is over 45 days old during Procedure 3. Next, we identified seven customer balances that are greater than their credit limits by an alarming $32,363.72. After performing our cutoff testing during procedure 5, we located one cutoff error for $29.256.67 that was not shipped until 2008. Fortunately Procedure 6 proved that there are no customer accounts that have credit balances that need to be considered for reclassification. In conclusion, we have discovered the total of misstatements per the entire population as follows: not material