# data[].attributes.headline
Credit balance has no detailed explanation or written confirmation. Has just accepted the financial controllers word. Investigate the balance to determine whether accurate treatment / confirm it is payable

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Credit balance has no detailed explanation or written confirmation. Has just accepted the financial controllers word. Investigate the balance to determine whether accurate treatment / confirm it is payable

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Ask customers to confirm the amount instead of providing it and asking Y/N

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Ask customers to confirm the amount instead of providing it and asking Y/N

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Any foreign currency debtos should be retranslated using exchange rate as at y/e from reliable third party source. Compare this to sterling balance client has recorded in the ledger. Investigate further if difference is > PM.

# data[].attributes.subject
Any foreign currency debtos should be retranslated using exchange rate as at y/e from reliable third party source. Compare this to sterling balance client has recorded in the ledger. Investigate further if difference is > PM.

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Revenue recognition risk - Post YE review due to possibility of enhancing profits with a view to AIM listing. Potential for incr. sales pre YE reversed post YE

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Revenue recognition risk - Post YE review due to possibility of enhancing profits with a view to AIM listing. Potential for incr. sales pre YE reversed post YE

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Not appropriate to change a sample because the financial controller believes it's sketchy - Risk!

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Not appropriate to change a sample because the financial controller believes it's sketchy - Risk!

# data[].attributes.body
Selecting only 10 largest balances does not provide us with a good representation of a population; should be selected either randomly, or excluding the large balances to test separately, leaving random testing for smaller ones

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Gain an understanding of what the large credit balances in the ledger relate to - are these customer overpayments? Or are there missing sales invoices which have not been posted? 

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Gain an understanding of what the large credit balances in the ledger relate to - are these customer overpayments? Or are there missing sales invoices which have not been posted? 

# data[].attributes.body
Therefore enquiries with management should be undertaken. Based on response we can test the balance further if needed.

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Letters were sent out on 2nd July and the date received should have been the 30th June 2018, prior to the date the letters were sent. The balance does not agree! - Please investigate further

# data[].attributes.body
Negative confirmations are not sufficient audit evidence. Additional testing required for these balances.

# data[].attributes.body
Contentious item may lead to a partial or full bad debt as a result of dispute. Greg should review correspondence from customer - provision may be required for difference, or contingent liability depending on likelihood.

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You selected a sample of 10 items, only have gained two responses... this is not representative of the entire balance! We need to look at another audit method.

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Can't be satisfied with the other 8 just because 2 are correct. If cant obtain the circs then need to do alternate testing

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Newark still have the risks and rewards of the debts and therefore shouldn't have derecognised them from the balance sheet.

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Newark still have the risks and rewards of the debts and therefore shouldn't have derecognised them from the balance sheet.

# data[].attributes.body
Agree amount received from debt factor to bank statement. To ensure it has been received and it come from debt factor.

# data[].attributes.body
If 400 000 of receivable was categorised as bad debt, those would have been charged to P&L; when Newark finally got paid, this should have been reversed, but instead the entries were made outside of P&L, with debit to cash and credit to trade ref's; must be reversed.

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Has this been declared as a related party transaction?

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Has this been declared as a related party transaction?

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Unusual item; why there are more than 10 times more credit notes in July 20X8? Post year end, so high risk; need to challenge what is the rationale behind it, discuss with the client.

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Concerning that Newark have loaned a struggling company 2 million. Can we obtain a letter of comfort of the viability of Brass to repay this loan? If not, we should assess the position of the company. E.g are their latest accounts published

# data[].attributes.subject
Concerning that Newark have loaned a struggling company 2 million. Can we obtain a letter of comfort of the viability of Brass to repay this loan? If not, we should assess the position of the company. E.g are their latest accounts published

# data[].attributes.body
I feel like we're missing some procedures here. Are the figures still in receivables? Please check. if credit notes were issued what happened to the inventory? There is a balance of 283k here and the aggregate figures exceed materiality. Please let the respective team know that they will need to ensure that the accounting adjustments for these credit items have been matched back to items such as: receivables, stock, sales etc!

# data[].attributes.body
Financial controller's explanation to not account for provision is not accurate; general allowance for bad debts will not be brought forward to the following financial year. Provision must be recognised.

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There is a potential that YE Revenue is overstated as lots of CR notes have been raised post year end. 

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There is a potential that YE Revenue is overstated as lots of CR notes have been raised post year end. 

# data[].attributes.body
A sample of post year end (July X8) individual credit notes need to be tested to determine if they relate to pre year sales invoices - if so a provision should be recognised at the year end to account for these credit notes.

# data[].attributes.body
Aged Receivables days in line with prior year, but two months is longer than the credit period for customers, with the exception of DIY Stores. Greg should enquire with management regarding the potential requirement for a provision. After date cash should be reviewed to confirm or dispute representation.

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What is the likelihood that Newark will receive the cash? Do we need to check for a provision? The annual sales is 3mn. Is this dispute likely to affect future sales? It is 12.5% of total sales so they would be considered a major customer lost if the dispute is not settled...

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Dispute with a large client has lead to £200k not being paid. We should obtain the correspondence and assess the likelihood of this being paid. If it is not likely to be paid the full 200k should be provided for.

# data[].attributes.subject
Dispute with a large client has lead to £200k not being paid. We should obtain the correspondence and assess the likelihood of this being paid. If it is not likely to be paid the full 200k should be provided for.

# data[].attributes.body
Review loan agreement to confirm amount borrowed and interest rates, in this case interest free. Confirming circumstances of breaching loan agreement.

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Inspect whether the company is trying to reduce its tax liability by offering an interest free loan to a company, which depends on its finance.

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If this loan is unlikely to be recoverable a provision ought to be recognised.

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If this loan is unlikely to be recoverable a provision ought to be recognised.

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Need to review Brass financial records/ forecasts to determine if repayment is likely.

# data[].attributes.body
Below materiality so of lower risk. Has this 75k been accounted for as bad debt or is it still in receivables? At what point will Newark consider the debt to be non-recoverable? Please inquire.

# data[].attributes.body
Some debtors resident in France. Need to do FX testing on those balances to ensure translated correctly at YE
describe testing: for a sample of FX transactions, agree exchange rates used to a reliable 3rd party source, the recalculate

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Why have you asked the client to make an allowance of 50k?

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Why have you asked the client to make an allowance of 50k?

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You need to very carefully consider your role here. We are an auditor and thus must maintain independence and cannot tell the client how to account for their items.... Please escalate this type of matter to someone more senior in future.

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Is there a basis for retaining £40k on SFP?
If not, likely that this will not be received and should be adjusted through SPL.

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Okay so we have an interest free loan to a related party company as two directors also sit on the board of directors of brass. It is a related party transaction but it seems as though neward would suffer if Brass went out of business? I would suspect fraud. Can you please speak to the team reviewing suppliers and check if Brass is a major supplier and the balances of stock that Brass has supplied historically? Also, can we please consult the ICAEW and manager on this point as it seems suspicious.

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Have we enquired with management as to the reason for the credit notes?
The reason may impact other sales, so a provision for further credit notes may be required at year end. Discuss with management and review after date activity for further credit notes.

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Cut off risk - appears to be no tracing back to relevant sales invoices. Need to confirm the original sales invoice date for the credit notes raised in July to ensure in correct period.

# data[].attributes.subject
Cut off risk - appears to be no tracing back to relevant sales invoices. Need to confirm the original sales invoice date for the credit notes raised in July to ensure in correct period.