Answered: Explain why the analysis of differences…

Explain why the analysis of differences is important in the confirmation of accounts receivable, even if the misstatements in the sample are not material.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter8: Specialized Audit Tools: Attributes Sampling, Monetary Unit Sampling, And Data Analytics Tools

Section: Chapter Questions

Problem 32RQSC

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Question

Explain why the analysis of differences is important in the confirmation of accounts receivable, even if the misstatements in the sample are not material.

Expert Solution

Step 1

Every business sells goods on credit. The goods sold on credit are known as accounts receivable or sundry debtors. Sometimes there are differences in the accounts receivable that should be analyzed separately & balanced. Even if the differences are not material they might show a problem.

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