Auditing Accounts Receivable – Focusing Procedures for Testing Existence and Valuation

Accounts receivable tend to carry a higher risk of material misstatement due to the complexity and subjectivity involved with initial recognition, subsequent measurement, and valuation. In addition, revenue recognition is presumed to be a significant fraud risk. This module will explain tips and best practice techniques for auditing common accounts receivable risks, primarily focusing on existence and valuation.

Major Topics:

• Typical risks of material misstatement related to accounts receivable
• Practice tailoring the detailed audit plan to the assessed risk of material misstatement
• Overview of more complex issues, such as methods for converting accounts receivable to cash
• External confirmation audit considerations, including evaluating responses for propriety
• Evaluating the valuation of accounts receivable