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Assignment ID: FG133140636
Case Study – ACME Limited – Dianne Lochan is a senior auditor with Bella Buster and Associates (Bella Buster), an external auditing firm based in Oshawa.
Dianne is currently working on the audit of the accounts receivable of Acme Limited (Acme), one of Bella Buster’s clients.
During the risk assessment stage, Dianne conducted an audit data analytic using data provided directly by Acme, by grouping Accounts Receivable by days overdue to assess the risk of the accuracy, valuation, and allocation assertion and an overstatement of accounts receivable.
During the past few weeks, Dianne conducted interviews with Acme’s accounts receivable manager, its CFO, and the staff working in the accounts receivable department.
Dianne has also overseen the external confirmations of accounts receivable, 30 percent of which required the recipient to respond as to whether or not the amount stated was correct.
Dianne also conducted a review of subsequent cash receipts from Acme’s customers. She vouched a sample of accounts receivable balances back to the underlying invoices, cash receipts, and sales returns, and traced a sample of these documents to the accounts receivable ledger.
1. List the types of audit evidence gathered by Dianne and comment on the persuasiveness of each type.
2. Link each type of evidence to the relevant accounts receivable assertions.