Audit of Receivables1 min read

What are Receivables?

Receivables are amounts of money that are owed to a person or company by customers or clients for goods or services that have been provided. In other words, receivables are amounts that are expected to be paid in the future as a result of transactions that have already taken place. As a result, these amounts may be due in the short term (usually within 30 days) or in the long term (more than 30 days). Companies typically keep track of their receivables and other financial information using accounting software or other tools.

Audit of Receivables

An audit of receivables is an examination of a company’s accounts receivable to verify the accuracy and completeness of the information. This typically involves reviewing the company’s records and supporting documentation, such as invoices and receipts. Make certain that the amounts shown on the company’s financial statements are correct and complete. Additionally, the audit may also include testing a sample of transactions to ensure that they were recorded properly. This is to ensure that appropriate controls are in place to prevent errors and/or fraud. Hence, the purpose of an audit of receivables is to provide assurance that the company’s financial statements accurately reflect the amounts that are owed to it.

Procedures/ Controls

  1. Trace payable report
  2. Investigate reconciling items
  3. Test verification of invoices
  4. Match invoices to goods inward register
  5. Ascertainment of the number of accounts for verification
  6. Confirm accounts payable balance
  7. Review payment receipts
  8. Assess doubtful accounts
  9. Review credit/ debit notes
  10. Bill and hold purchase
  11. Purchase return
  12. Invoices and hold sales/ services/ revenue
  13. Sales/ services/ revenue return
  14. Related party payables
  15. Trend Analysis
  16. Segregation of Duties