Substantive Procedures for Accounts Receivable
Auditing Accounts Receivable
Accounts receivable are tested primarily for existence, valuation, and collectibility. External confirmations provide strong evidence regarding outstanding customer balances.
- Positive confirmations require every customer to respond.
- Negative confirmations request a response only if the balance is incorrect.
- Subsequent cash receipts help evaluate allowance for doubtful accounts.
Summary
Receivable audits rely heavily on confirmations and evidence of customer payments.