Reference no: EM133182309

Question - This is the first year of audit of YG Inc., a medium-sized company, that is considering selling its business because of severe under financing. A review of the acquisition and payment cycle indicates that controls over cash disbursements are excellent, but controls over acquisitions cannot be considered effective. The client lacks receiving reports and a policy as to the proper timing to record acquisitions. When you review the general ledger, you observe that there are many large adjusting entries to correct accounts payable.

How would you conduct the audit?

Discuss the reason behind the nature and extent of the procedures.