Reference no: EM132480469
Point 1: ABC Ltd. is a distributor of ski equipment. The company's records includes sales and purchase orders, purchasing invoices, a sales journal, a purchases journal, and sub ledgers for both payables and receivables. There is a Canadian and a U.S. bank account.
Point 2: All customers have a pre-determined credit limit that is noted in their files. If a customer's order exceeds the authorized credit limit, the credit manager must approve the sale; otherwise, the sales clerk enters and approves the order for processing.
Point 3: The allowance for doubtful accounts shows that $75,000 worth of receivables are greater than 90 days past due. There are no past due accounts payable. ABC has 4 U.S. suppliers. An allowance for doubtful accounts is prepared by management and done on a case by case basis based on past payment history and management judgment.
Point 4: The accounting department receives a report each day of goods shipped and purchased goods received. All shipments are invoiced within one day of shipment.
Point 5: All liabilities are paid within 30 days. An accrual listing is prepared from unmatched receiving reports each month.
Required
Question 1: What are the 4 substantive procedures for ABC? For each audit procedure, be clear in the type of procedure e.g. tracing, vouching, observing, scanning, and so on and state the related key management assertion.