Question Two 30 You Are Currently Auditing The Revenue And Receipts Cycle Of The Hardware Store Pty Ltd Sales Are M 1 (48.17 KiB) Viewed 12 times
QUESTION TWO [30] You are currently auditing the revenue and receipts cycle of The Hardware Store (Pty) Ltd. Sales are mainly on credit as the clientele of the business are big building contractors who prefer to keep an account which they settle on a monthly basis. During the audit you became aware of the fact that the management of the company wants to pay as little income tax as
possible. You realize that the risk of understatement of sales is high as management wants to keep profits low. Required: 2.1. Describe completeness as an assertion in financial information and explain why the completeness assertion will be the biggest assertion at risk with the understatement of sales. (5) 2.2. Describe the appropriate substantive procedures you will perform to audit the credit sales of the company at year end. (15) 2.3. Describe the procedures you will follow to perform a positive debtors circularization as part of the audit of trade receivables. (10)
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