ny and granted the exclusive right to distribute children’s toys. The company debtors ageing indicates that there are in excess of 450 accounts in its trade receivables ledger, with total balances outstanding of RM2,500,000 as at 30 September 2020. You have selected a number of trade receivables accounts for inclusion in the confirmation. Your first task is to draft a confirmation letter for your audit manager to review.
Your audit firm, Vreg & Co has assigned you, the audit senior to take charge of the trade receivables audit of Joy Toys Sdn Bhd for its financial year ended 30 September 2020. Your tasks include the organization of a trade receivables confirmation in respect of balances as at that date. Joy Toys Sdn Bhd, is appointed by a US based company and granted the exclusive right to distribute children’s toys. The company debtors ageing indicates that there are in excess of 450 accounts in its trade receivables ledger, with total balances outstanding of RM2,500,000 as at 30 September 2020. You have selected a number of trade receivables accounts for inclusion in the confirmation. Your first task is to draft a confirmation letter for your audit manager to review.
(i)
Describe the TWO (2) types of
(ii)
Comment on the extent to which results from a negative confirmation may be relied upon to verify the existence of year-end receivable balances and contrast this to the reliability of the results received from a positive confirmation.
Step by step
Solved in 2 steps
