WORK PROGRAM

TRADE AND OTHER ACCOUNTS RECEIVABLE AND REVENUES

CLIENT: ________________________________________________ AUDIT DATE: ______________
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AUDIT OBJECTIVES
To determine that:
a. Receivables represent all amounts owed to the entity
at the balance sheet date and have been properly
recorded.
b. Sales and other revenues represent all transactions
(products or services provided) that occurred during
the period and have been properly recorded on a
consistent basis.
c. The allowances for doubtful accounts, returns and
allowances and discounts are adequate but not
excessive, and the related expense provisions for
these items have been allocated to the proper period.
d. Receivables, revenues and related provisions for bad
debts, returns and discounts are properly described
and classified , and adequate disclosures with respect
to these amounts (including disclosures of amounts
that have been pledged, discounted or sold with
recourse or are with related parties have been made.
SCOPE-SETTING CONSIDERATIONS
1. Check off below assessed level of risk (see ARA
Document).
Level of Risk
High Normal Minimal
Trade receivables
____ ______ _______
Other receivables
____ ______ _______
Valuation allowance ____ ______ _______
Gross sales
____ ______ _______
Sales deductions
____ ______ _______
Other income
____ ______ _______

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2. Check off below planned level of assurance from

analytic review, taking into account the assessed
level of risk.

Level of Assurance
Substantial Moderate Minimal
Trade receivables
_______ ________ _______
Other receivables
_______ ________ ______
Valuation allowance _______ ________ ______
Gross sales
_______ ________ ______
Sales deductions
_______ ________ ______
Other income
_______ ________ ______

3. Consider assessed level of risk, planned level of

assurance from analytic review and preliminary
estimate of materiality (PEM), and set appropriate
audit scopes for substantive test procedures to be
performed.
a. List additional procedures deemed necessary to
address identified risks; cross out procedures
which need not be performed.
b. Revise scope of tests, including listing scopes if
extended testing is deemed necessary.
CRITICAL SUBSTANTIVE TEST PROCEDURES
Analytic Review (To be done by Staff In-Charge)
1. Refer to lead schedule (or WBS and WPL) for
accounts receivable trade and others, net sales
and other income including related expense
provisions and valuation allowance, and compare
individual account balances with information for
prior period. Obtain explanations from, and evaluate
responses by, management for significant or
unexpected fluctuations.

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2. Determine need for additional procedures to verify

unexplained fluctuations or management responses.
Circularization
3. Obtain a PBC aged list of accounts receivable:
a. Foot total (balance) column of aged list and
cross-reference to lead schedule.
b. Scan aged list for unusual items (e.g., round
amounts; unusually large number of credit
balances). Investigate accordingly. Consider
inclusion in accounts for circularization in Step
4.
4. Select and list accounts for circularization in
Confirmation Control Practice Aid (AR- ).
Scope: All balances over 50% of PEM plus (check
off applicable box):
Balances over 20% of PEM but not
exceeding 5 accounts.
Representative sample of at least 5 accounts.
5. Obtain confirmation of selected accounts:
a. Have client prepare confirmation requests.
Review and send first requests. Retain duplicate
copies; send second requests, as necessary. (use
CRAM format).

b. Upon receiving confirmation replies, update

CRAM and file replies in working papers as CB
(confirmed balance); CB with gratuitous
comments; and RDs (reported differences).

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6. Have client investigate and reconcile RDs. Obtain

PBC reconciliations of RDs:
a. Foot reconciliation and cross-reference amounts
to Confirmation Control and confirmation reply.
b. Review responsiveness of reconciliation to
differences reported.
c. Obtain explanations for unusual items.
Investigate accordingly.
7. Perform alternative procedures for NRs (nonreplies)
and RPOs:
a.

Have client list subsequent collections in

Confirmation Control (Listing scope: Paid
invoices over 10% of PEM). Trace collections
to covering official receipts (Scope: At least
5 of paid invoices listed).

b.

For unpaid amounts included in the balance,

have client list covering sales invoices and
shipping documents in Confirmation Control
(Listing scope: Unpaid invoices over 10% of
PEM). Trace to sales invoices and shipping
documents (Scope: At least 5 of unpaid
invoices listed).

c.

Consider collectibility of significant unpaid

balances, especially RPOs.

8. Evaluate the nature of any errors disclosed by our

circularization or alternative procedures (i.e.,
whether they are recurring), and determine and on
our procedures.
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Test of Sales and Cash Receipts Transactions

9. Select a representative sample of shipping
documents (Scope: At least 5 shipping documents
selected by randomly generating delivery receipt
nos.).
Corresponding
DR #
SI #
OR #
_____________________________________________
_____________________________________________
_____________________________________________
Perform the following:
a. Trace the selected shipping documents forward to
the accounting records, as follows:
(1)
(2)

Trace above shipments to corresponding

sales invoices and to entries in sales book
and A/R subsidiary records.
Trace subsequent collection of above
shipments to corresponding official
receipts and to entries in cash receipt book
and in A/R subsidiary records.

b. Check clerical accuracy of covering sales invoice:

(1) Trace prices to price list.
(2) Check footings and extensions.
c. Scan individual entries in the pages of sales book
and receipts book to which entries were traced in
Step 9.a above, and check numerical sequence of
sales invoice and official receipt nos. entered
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thereon:
(1) Examine any voided sales invoices/ official
receipts; check that all copies are cancelled
and preserved intact.
(2) Investigate any missing sales invoice/official
receipt.
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Cut-off Tests
10. Obtain a PBC schedule of yearend shipping and
sales cutoff data (Listing scope: Shipments over 10%
of PEM for 5 days before and after yearend).
a. Trace selected items in schedule to
corresponding delivery receipts, sales invoices
and accounting entries (Scope: At least 5 of
largest items).

b. Scan sales journal entries during cutoff period

for shipments over the above listing scope to
determine completeness of schedule.
c. Using cutoff data obtained during physical count,
review information shown in cutoff schedule to
determine if proper cutoff was obtained.

(NOTE: This Step should be performed in conjunction

with Step 9 in Standard Work Program for Inventories.)
Valuation Tests
preliminary work)

(To be done, preferably during

11. Obtain a PBC comparative rollforward of activity in

the allowance for doubtful accounts:
Check footings and cross-reference ending balance
to lead schedule.

a. Trace beginning
workpapers.

balance

to

prior

years

b. Obtain explanations for large, unusual items.

Investigate as deemed necessary.
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12. Using a carryforward PBC, obtain explanations for

significant variations in aging, no. of days sale in
A/R, and % of allowance for doubtful accounts to
total accounts receivables between this year and last
year. Evaluate explanations and investigate as
deemed necessary.
13. Inquire as to clients procedures for determination of
allowance for doubtful accounts. Discuss with
management the need, if any , for additions to the
allowance in light of currently prevailing conditions
in the economy, industry and policies within the
company.
OTHER SUBSTANTIVE TEST PROCEDURES
Tests of Aged List of Accounts Receivable
14. Obtain PBC reconciliation of aged list of A/R with
general ledger:
a. Foot reconciliation and cross-reference amounts
to aged list and lead schedule.
b. Review reconciliation for large, unusual items.
Investigate accordingly.
c. Vouch significant adjustments made to the
general ledger resulting from the reconciliation
(Scope: Items over 20% of PEM).

15. Test clerical accuracy of aged list of A/R:

a. Check footings of two (2) columns of past dues,
and crossfootings of totals.
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b. Trace individual balances of selected accounts to

A/R subsidiary records (Scope: Same accounts
selected in Step 4.)
c. Trace aging information for selected accounts to
subsidiary records and to supporting invoices
and shipping documents; concentrate on
significant accounts reflected as current.
Recompute aging of the selected accounts.
(Scope: At least 5 significant accounts).
16. Discuss individually large and/or significant past due
receivables with a responsible officer to determine
collectibility (Scope: Balances over 20% of PEM).
Analyses of Significant Other Receivables
17. Obtain PBC analyses of details comprising yearend
balance of significant other accounts receivable.
(Listing scope: Accounts over 10% of PEM).
a. Review nature of receivables and reasonableness
of recorded amounts.
b. Discuss collectibility and classification with
client.
c. Consider circularization of significant balance
(Scope: Balances over 20% of PEM but not
exceeding 5 items).

Analysis of Significant Other Income Accounts

18. Obtain PBC analyses of items comprising other
income accounts (other than those analyzed in
connection with related balance sheet accounts).
(Listing scope: Over 10% of PEM.)
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a.

Review nature of other income

reasonableness of recorded amounts.

b.

Investigate large, unusual items, as deemed

necessary.

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and

Review of Presentation and Adequacy of Disclosures

19. Determine whether accounts have been pledged,
discounted, factored or assigned.
20. Determine appropriateness of clients revenue
recognition techniques where sales are made on
consignment, with a right of return or under other
conditions of uncertainty.
21. Additional procedures deemed necessary to address
identified risks.
__________________________________________
__________________________________________
__________________________________________
AUDIT CONCLUSION
22. Conclude below on appropriate objectives for accounts receivables and revenues.
Based on the substantive test procedures, I/we performed as outlined above, it is my/our opinion
that the audit objectives set forth at the beginning of this Work Program have been achieved,
except as follows:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

_____________________________________________________________________________
_____________________________________________________________________________
Signature(s) ________________________

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