1.Compile a working paper indicating all relevant information that should be included in the working paper. In your design and compilation of the working paper ensure that include the following elements: Audit Objective: Sample: Audit Procedures: Testing workings and results: Conclusion:
1.Compile a working paper indicating all relevant information that should be included in the working paper. In your design and compilation of the working paper ensure that include the following elements: Audit Objective: Sample: Audit Procedures: Testing workings and results: Conclusion:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1.Compile a working paper indicating all relevant information that should
be included in the working paper. In your design and compilation of the
working paper ensure that include the following elements:
Audit Objective:
Sample:
Testing workings and results:
Conclusion:
Transcribed Image Text:An audit of trade receivables (debtors) has just been completed and the following information
is on file:
Jane Motha, a junior internal auditor, evaluated trade receivables (debtors) of Plastic Designs
Ltd. The purpose of the audit was to review the adequacy and effectiveness of internal controls
over outstanding debts. A sample of 30 debts was reviewed by Jane Motha on 15 August
2021. The sample was randomly selected from a population of 80 outstanding invoices for the
period 01 June 2020 to 30 June 2021. Jane enquired from the financial manager whether
measures were taken to follow-up on outstanding debts. In addition, confirmation of
creditworthiness report for the sample selected was inspected to ensure that only qualifying
customers are granted credit.
Out of a sample of 30 debts, a total of 20 customers were not assessed for creditworthiness
and follow-up on outstanding debts was not done for all invoices tested. This caused Plastic
Designs Ltd to write-off a total of R3 million on bad debts. The controls over outstanding debts
are ineffective and a finding is raised. Nkosinathi Kwena, a senior internal auditor gave Jane
review notes on her working paper (TRWP001) on 20 August 2021.
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