Reference no: EM133328191

Case: You are the audit manager of the audit of Pretty House (PH), a limited liability company. The company's year end is 30 June, and PH has been an audit client for three years. PH sells small accessories, plant and decorative materials exclusively to the designer firms. They have 12 warehouse style shops locatedthroughout the country.

PH does not manufacture any products themselves. The audit fieldwork is due to commence in 3 weeks time and you are preparing the audit work programme for the trade receivables section of the audit. Extracts from the clients trial balance show thefollowing information.

From your reviewof last year'saudit file you have determined that last year there were 2 specificprovisions of $5,000 and $2,000 as well as a 3% general provision. Initial conversations with the client indicate that there are no specificprovisions that are to be made thisyear however they intend to reduce the general provision from 3% to 2%. You are aware that two of PH's major customers went into administration during the year and they are likely to be liquidated in the near future. Both of these customers owed material amounts at the year-end.

Required:

Question 1: Describe substantive procedures the auditor should perform on the year-end trade receivables of Builders Mate.

Question 2: Describe how audit softwarecould facilitate the audit of trade receivables.