Question

Problem 2 (20 points). A staff member of the audit team, Andy Williams, has provided you with the attached working paper for the lead schedule of accounts receivable for the audit of your client, Moon River Corporation. for the current year ending December 31, 20X3. You are reviewing the working paper to provide feedback to the staff auditor about the work performed. REQUIRED: Review the attached working paper and discuss the deficiencies, if any, in the preparation of this working paper. Provide a specific list that can be used by the staff auditor to make the appropriate corrections, if any, that need to be made.

Answer 1

Audit working papers also called as audit documents are important part of audit work as it serves as an evidence which supports the auditor in making their conclusion and report on the financial statement of a company .

Audit papers are required to be kept safe by the auditors and should be prepared in such manner that it is understandable and also helps understand the analysis or calculation done by audit staff.

In the given example the audit working paper prepared by the audit staff is on Account Receivable,there are lots of shortcomings in this working paper that needs to be checked and corrected.The following should be part of the audit working paper:

1. First and foremost the name of the company should be mentioned in the working paper so that it is evident that for which company it belongs to in this case, Moon River Corporation
2. The date of such working, i.e the date of preparation of this working paper.
3. The name of the person to whom it belongs to,who has prepared the audit document.
4. There should be proper explanation of each column that is prepared and what it shows.In case of any calculation,it should be properly explained in steps.
5. The account Receivable should also show the aging analysis and the customers with highest balance.
6. The adjustment reclassification amount should be properly explained and shown what it relates to.
7. The doubtful accounts list should be given so that there is proper understanding of accounts/customer who have turned doubtful debts.
8. Showing the details of aging of the amounts receivable is also important so that any possible accounts becoming NPA is known and the figures become more relevant.Dividing the amounts due uptown 30,60,90 and above days helps in better understanding of the situation
9. The signature of the person who made this is important so that it is known who is responsible for the preparation of the same