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I will pay for the following article Auditing Accounts Receivable. The work is to be 2 pages with three to five sources, with in-text citations and a reference page.
I will pay for the following article Auditing Accounts Receivable. The work is to be 2 pages with three to five sources, with in-text citations and a reference page. Accounts Receivable Audits When auditing accounts receivable, it is absolutely essential to determine the accuracy of accounts as well as ensuring that payment, discounts and additional fees are accurately applied to each customer account. This may not always be an easy task as the existence and rights assertions are necessary to determine correct accounting and reporting procedures. “Assertions regarding existence or occurrence address whether assets and liabilities exist at a given date and whether recorded transactions occurred during a given period” (Clikeman, 2004). Each transaction or financial claim should be effectively verified by supporting documentation along with the account. Supporting documentation can include a receipt of purchase, check numbers, and invoices just to name a few. Such analytical procedures to verify existence assertions would be bank reconciliations and cash flow analyses. Without the documentation and analytical procedures to support financial transactions, the accuracy of the accounts receivable will not be strong and this will greatly overstate or understate each account. To correct this, the existence and rights assertions are necessary to audit each account and verify that each transaction recorded has been recorded accurately and within the specified time period.
The payroll cycle is a common source of frustration for an accounting and auditing department because of the myriad errors and cases of fraud that can take place. Employees may turn in fraudulent time sheets that state they have worked more or less hours than were actually completed. Supervisors may not adequately review all time sheet data and it may be passed through the payroll cycle without ever being checked for accuracy. Furthermore, employees can sometimes create ghost employee records where payroll is paid to an employee that does not exist and costs the company thousands of dollars in unnecessary payroll expenses. Separation of duties is a common control method utilized by accounting and payroll professionals to detect payroll errors and catch fraudulent activity before it ever truly becomes an issue. For instance, companies are encourage to “have a minimum of two employees review bank statements and returned checks every month. Also, divide Payroll duties so different people are responsible for approving time sheets, entering hours worked data, distributing paychecks, etc.” (Bilski, 2010). Having multiple people fill specific duties throughout the payroll cycle will have an adequate set of controls in place to check for errors, fraud and time sheet omissions.
All transactions should be supported by financial documentation to verify and validate that all recorded entries on the books are accurate. If a sample of accounts are being audited and analyzed, the best place to find supporting documentation would be through the company’s internal bank statements, invoice records, payment receipts records and deposit slips. A bank statement will help show any deposits that have been applied to the company’s account. These deposits should also be accurately recorded in the specific account under accounts receivable for the customer. In addition, checks may not have been deposited into the bank account. therefore, a company’s payment receipt documentation would be useful in determining whether a payment had been physically received, which invoice it paid and where it is currently sitting in the payment process. The invoicing records will vouch for all services that were actually completed or any materials sold on account. Between the invoicing records and the payment receipt documentation, a bulk of the audit process can be completed to verify and validate accounting information and transactions on each account for accounts receivable. It is important to note that any transaction that is reported or unreported that does not have supporting documentation will not be included in the audit and will skew all financial records. Therefore, it is highly critical that financial records and supporting documentation are present for all transactions to achieve an accurate accounts receivable audit.
References
Bilski, J. (2010). Payroll fraud: are you vulnerable to ‘ghost’ employees?. CFO Daily News, Retrieved from http://www.cfodailynews.com/payroll-fraud-are-you-vulnerable-to-ghost-employees/
Clikeman, P.M. (2004). Financial statement assertions: auditors can use a framework built around five types of assertions to help assure financial statements are fairly presented. Internal Auditor, Retrieved from http://findarticles.
