Procedure

Done by

W/P Ref

1. Prepare a lead schedule for Accounts Receivable and agree to working trial
balance.

CS

D-1

2. Foot the file and agree to the lead schedule.

3. Check for duplicate invoice numbers in the unpaid invoices and shipping files.
4. Age the unpaid invoices and identify any unpaid invoices older than 45 days.
5. Identify any customer balances that exceed the credit limit or for which there
is no credit limit.
6. Perform a sales cutoff test.
7. Determine the amount of any credit items in the unpaid invoice file and
consider the need to reclassify those liabilities.
8. Select a PPS (MUS) sample of unpaid invoices. Use tolerable misstatement
(materiality) of $500,000, expected misstatement of $75,000, and a
confidence of 95 (5% TD risk). Combine the Confirmation A file with the
sample file to determine the results of the confirmation process. Determine
any misstatements and project the misstatements to the population.
9. Prepare a memo for the senior who will complete the audit of Accounts
Receivable summarizing the results of the above procedures and identifying
additional procedures those results indicate should be performed.

NSG Manufacturing Company

Audit Program - Accounts Receivable
Year ended December 31, 2009