# data[].attributes.body
Fraud

# data[].attributes.body
a. Audit Procedures

Ali: Review relevant documentation such as invoices, shipping documents, and credit memos to determine the cause of the discrepancy.

Badrul: Review subsequent cash receipts to verify whether the balance was settled post year-end.

Cempaka: Engage in direct discussions with the client’s legal or credit management personnel for clarification.

b. Ali: Moderate audit risk - If reconciled through appropriate documentation and timing differences are evident, the risk may be mitigated.

Badrul: High Audit Risk - The absence of direct confirmation necessitates reliance on alternative procedures, which may not be equally persuasive.

Cempaka: High audit risk - If unresolved, this could indicate either a misstatement or the need for an allowance for doubtful accounts.

# data[].attributes.body
Analyze sales returns and allowances. If there unusually low returns or allowances relative to sales. Also compare historical trends.

# data[].attributes.body
1. Budget vs Actual Analysis - Compare revenue to budgets or forecasts.

2. Ratio Analysis - Compare revenue-related ratios to prior periods, industry, or budgets.

# data[].attributes.body
Cut-off Testing – Review sales recorded near period-end to ensure revenue is recognized in the correct period

# data[].attributes.body
Significant or unusual variances, especially around period-end, may indicate inflated revenue and should be investigated further.

# data[].attributes.body
Check revenue vs account receivables- if revenue high but receivable are rising faster, may indicate fake sales not collected

# data[].attributes.body
Month by month sales review

# data[].attributes.body
1. Investigate the difference: Obtain a reconciliation from the client to explain the variance.

2. Perform alternative procedures such as:

Review subsequent cash receipts.

Inspect related sales invoices and delivery notes.

3. Investigate the nature of the dispute: Obtain details from the client about the dispute

# data[].attributes.body
Check Receivables. If accounts receivable is rising faster than sales, revenue might be overstated.

# data[].attributes.body
Regression & Predictive Analytics

- Use statistical models to predict expected revenue based on historical trends, economic factors, and industry data.

# data[].attributes.body
Use external benchmarks to assess whether the company’s revenue growth is in line with industry peers.

# data[].attributes.body
Budget vs actual revenue

# data[].attributes.body
Compare revenue

Compare currentperiod revenue with prior periods,budget or forecast and industry averages.

# data[].attributes.body
Analyze Gross Profit Margin

# data[].attributes.body
Compare revenue with cash collections

# data[].attributes.body
Trend analysis: Spot unusual sales spikes.

# data[].attributes.body
Sales vs. Cash Receipts – Revenue should align with actual cash received such as discrepancies may indicate fake or premature sales.

# data[].attributes.body
Trend Analysiss: Compare revenue over multiple periods

# data[].attributes.body
Compare revenue trend

# data[].attributes.body
Compare revenue trends year on year

Ratio analysis

# data[].attributes.body
Compare Revenue Trends

Compare current year revenue with prior years. Look for unusual spikes or inconsistent growth without clear reasons.

# data[].attributes.body
Compare with Industry or Budget

Compare the company’s revenue to:

Industry averages

Internal budgets or forecasts
If the company is reporting much higher sales than expected or compared to competitors, may need to investigate further.

# data[].attributes.body
Review gross profit margins – A sudden increase in revenue without a corresponding increase in cost of sales may suggest inflated sales figures.

# data[].attributes.body
use ratio analysis

conduct trend

# data[].attributes.body
Compare Current-Year Revenue with Prior Periods

# data[].attributes.body
Ratio Analysis: Check revenue against related accounts (e.g., receivables, inventory, cash). If revenue grows but receivables or cash don’t, it’s suspicious.

# data[].attributes.body
a. Ali - review supporting documents

Badrul - review subsequent receipt

Cempaka - Evaluate reasonableness of the client’s assertion in light of the third-party confirmation.

b. Ali - moderate risk

Badrul - high risk

Cempaka - high risk

# data[].attributes.body
a.

Ali- Match invoices and payments to find the difference

Badrul - Do alternative procedures

Cempaka - Review dispute details and correspondence

b.

Ali - moderate risk

Badrul - high risk

Cempaka - high risk

# data[].attributes.body
(a) Audit procedures

Ali - Reconcile, review payments/credit notes, inspect invoices

Badrul - Alternative procedures (receipts, invoices, delivery docs)

Cempaka - Investigate dispute, legal docs, correspondence

(b) Audit risk

Ali - Moderate risk

Badrul - High risk

Cempaka - Moderate risk

# data[].attributes.body
a) Audit procedures

Ali : Check the difference between Ali’s confirmation and the client's records

Badrul : Since Badrul didn’t reply,check other evidence like Payment after year-end.

Cempaka : Read documents about the dispute.

b) Audit risk

Ali: Medium risk. There’s a small issue, but extra checking can solve it.

Badrul: High risk. No reply means we need strong other evidence.

Cempaka: High risk. If the money is not collected and not adjusted, it could be wrong in the accounts.

# data[].attributes.body
a)

Ali – Check invoices, payments, and credit notes.

Badrul - Check later payments (bank statements). Review sales invoices and delivery documents.

Cempaka – Check emails or letters

about the dispute.

b)

Ali – Moderate Risk

Risk of misstatement due to error or cutoff issue.

Badrul – Higher Risk

Lack of confirmation increases detection risk.

Cempaka – Moderate to High Risk

Dispute indicates potential impairment or recoverability issue.

# data[].attributes.body
a. Ali - Investigate the difference by checking sales invoices, delivery notes, and cash receipts.

Badrul - Perform alternative procedures like reviewing subsequent payments, invoices, and shipping documents.

Chempaka - Review correspondence, dispute documents, and evaluate the client’s explanation.

b. Ali - Moderate – Risk of misstatement due to possible timing error or incorrect recording.

Badrul - High – No confirmation and need to rely fully on alternative procedures.

Cempaka - High – Dispute increases risk of misstatement or bad debt. Must assess if the receivable is overstated.

# data[].attributes.body
a. Ali - the auditor should check documents like invoices and receipts to find out why the confirmed balance is lower.

Badrul - since there’s no response, the auditor should use other evidence such as payment records and delivery notes.

Cempaka - the auditor should get proof of the dispute from the client and decide if the balance needs to be adjusted or disclosed.

b. Ali’s case - has moderate audit risk due to the difference in balances.

Badrul’s case - has higher risk because there’s no confirmation, and other evidence must be relied on.

Cempaka’s case - has risk in presentation, as a dispute may mean the receivable is not fully collectible or needs special disclosure.

# data[].attributes.body
Ali

Audit procedure = subsequent cash receipt from ali

Risk = miderate risk

Badrul

Audit procedure = perform alternative procedure which sales invoice

Risk = high risk

Cempaka

Audit procedure = review dispute correspondence

Risk = moderate risk

# data[].attributes.body
1. Ali

Review any cut-off errors

Risk of overstatement of receivables

2. Badrul

Review sales invoice and delivery notes

Existence are uncertain

3. Cempaka

Get explanations or Review legal documents

Risk of misclassification

Most risky client is Cempaka

# data[].attributes.body
Ali

a)compare confirmation and client records, review sales invoices

b)moderate risk

Badrul

a)perform alternative procedure, review sales invoices, check cash receipts

b) high risk

Cempaka

a)investigate disputes detailed, reviewed legal documents, assess need for doubtful debt

b) hugh risk

# data[].attributes.body
Ali

Investigate the difference:

Compare the client's ledger with Ali’s confirmation.

Check if the difference is due to timing issues, such as:

Payments made by Ali not yet recorded.

Goods in transit or discounts.

Badrul

Perform alternative audit procedures, such as:

Examine subsequent cash receipts (payments made by Badrul after year-end).

Review sales invoices, delivery orders, and contracts for evidence of sale.

Check correspondence for any indication of disputes or problems.

Cempaka

Obtain written explanation from client management regarding the dispute.

Review:

Sales terms and contracts with Cempaka.

Any legal letters, correspondence, or emails showing dispute details.

Any adjustments, credit notes, or provisions for doubtful debts related to the dispute.

Consider the need for provision or disclosure in the financial statements.

Badrul

Higher Risk – Non-response increases risk of existence and accuracy issues. Must rely on sufficient alternative procedures

# data[].attributes.body
a. Procedures:

• Ali: Check reason for difference.

• Badrul: Do alternative tests (e.g. cash receipts).

• Cempaka: Verify dispute evidence.

b. Risk:

• Ali: Moderate.

• Badrul: High.

• Cempaka: Moderate to high.

# data[].attributes.body
Audit Procedures

1. Ali

reconcile the balance

2. Badrul

use authorithy to ensure the reason of unresponsive from the customer

3. Cempaka

Review the document such as invoice

Risk Assesment

1. Ali - Moderate Risk

2. Badrul - High Risk

3. Cempaka - Moderate Risk

# data[].attributes.body
a. Audit Procedures

Ali: Check for timing differences such as verify invoices and payments.

Badrul: Use alternative procedures such as cash receipts, invoices.

Cempaka: Review evidence of dispute such as check correspondence and contract terms.

b. Audit Risk

Ali: Moderate risk – possible overstatement.

Badrul: Higher risk – no direct confirmation.

Cempaka: High risk – dispute affects recoverability.

# data[].attributes.body
a. Audit Procedures

Ali: Review subsequent receipts, shipping docs, and customer correspondence to resolve the difference.

Badrul: Perform alternative procedures — check subsequent payments, sales invoices, and delivery notes.

Cempaka: Review dispute correspondence, invoices, and assess collectability.

b. Audit Risk Assessment

Ali: Moderate — discrepancy needs clarification.

Badrul: High — no response increases risk of misstatement.

Cempaka: High — dispute suggests possible collection or valuation issue.

# data[].attributes.body
You are auditing ABC Co and receive the following responses to receivables confirmations:

Ali: Balance confirmed, but lower than the client’s records.

Badrul: No response after two reminders.

Cempaka: Responded with agreement, but your client insists the account is still in dispute.

a. What audit procedures would you perform for each customer?
b. How would you assess the audit risk?

# data[].attributes.body
Investigate the reason,

Perform alternative procedures,

Evaluate the impact on audit risk,

And determine the appropriate audit opinion if evidence is insufficient.

# data[].attributes.body
The auditor should inform those in charge (like the board or audit committee) about the refusal and how it might affect the audit report.

# data[].attributes.body
Ask a reason

# data[].attributes.body
Auditor can try to obtain evidence through alternative procedures.

# data[].attributes.body
Think on the necessity of a changed viewpoint.

# data[].attributes.body
Understand the reasons:

Inquire why the client is refusing. There could be legitimate reasons (e.g., legal restrictions, sensitive customer relationships), or it might indicate potential fraud or management concerns.

# data[].attributes.body
Remind them that it is essential to remain transparent in the reporting

# data[].attributes.body
seek to understand the reason for the refusal and do alternative procedures to obtain appropriate audit evidence.

# data[].attributes.body
The auditor should ask the client why they don’t want to send the confirmations.

# data[].attributes.body
Think about whether the reason makes sense or seems suspicious.

# data[].attributes.body
Check the sales invoice and delivery notes.

# data[].attributes.body
Let the audit committee or board know about the refusal and its implications. Inquire about the reason of refusal

# data[].attributes.body
Examining sales invoices and shipping documents

# data[].attributes.body
Consider the impact on the audit opinion

# data[].attributes.body
The auditor should first ask the client why they are refusing. They need to assess whether the reason is valid.

# data[].attributes.body
Communicate with client's staff

# data[].attributes.body
The auditor should check subsequent cash receipts as an alternative.

# data[].attributes.body
Advice the client

# data[].attributes.body
The auditor should inform the audit committee or board of directors if the refusal affects the reliability of financial reporting.

# data[].attributes.body
Ask the client why they are refusing. There may be a valid reason, but it could also be a red flag.

# data[].attributes.body
make report and ask reason

# data[].attributes.body
If enough evidence can’t be obtained, the auditor may need to modify the audit opinion or even withdraw from the audit.

# data[].attributes.body
asking for reasons

# data[].attributes.body
Be strict and ask for the reason

# data[].attributes.body
evaluate the implication.

# data[].attributes.body
Legal confirmation

# data[].attributes.body
Ask the reason

# data[].attributes.body
ask for the reason

# data[].attributes.body
Demand the reason of the refusal

# data[].attributes.body
Be strict, use the authority as an auditor

# data[].attributes.body
Make a report to the authorities

# data[].attributes.body
send the letter again (send confirmation again)

# data[].attributes.body
unrecorded credit memo

# data[].attributes.body
Make mistake in recording the transaction such as invoice payment.

# data[].attributes.body
1. Timing differences

2. Goods in transit

# data[].attributes.body
Customer hasn’t received the invoice.

# data[].attributes.body
customer accounting discrepancies

# data[].attributes.body
Timing differences

Record errors

# data[].attributes.body
Goods in transit not yet received or recorded by the customer

Disputed amounts due to pricing, quality, or quantity issues

# data[].attributes.body
Returns

Manual entry errors

Duplicate invoicing

# data[].attributes.body
Third party billing

# data[].attributes.body
-ERRORS IN RECORDING

-GOODS NOT RECEIVED

-DUPLICATE INVOICING

# data[].attributes.body
discrepancies in amount

fraud

# data[].attributes.body
Customer Misunderstandings

The customer misinterprets the request or reviews their records incorrectly.

# data[].attributes.body
Currency exchange rate difference

Difference due to currency conversion rates between invoicing and recording

# data[].attributes.body
Wrong amount – Errors in invoice amount, such as overcharging or undercharging

Duplicate billing – The customer was invoiced more than once for the same transaction

# data[].attributes.body
Errors in Recording

# data[].attributes.body
there's potential fraud or misstatements

# data[].attributes.body
Unapplied Payments

The customer has paid, but the payment hasn’t been properly matched to their account.

# data[].attributes.body
Timing Differences

A payment or sale might have happened just before or after the confirmation date.

This means the company’s records and the customer’s records don’t match yet.

# data[].attributes.headline
Common reasons for exceptions found in receivables confirmation 

# data[].attributes.subject
Common reasons for exceptions found in receivables confirmation 

# data[].attributes.body
Mistakes in invoice amounts, customer account details, or posting errors.

# data[].attributes.body
Errors in recording – Wrong amount recorded by client or customer.

# data[].attributes.body
Invoices issued but not received by the customer.

# data[].attributes.body
1. Returns / allowances

2. Goods in transit

# data[].attributes.body
Timing differences

# data[].attributes.body
Payment not recorded