Audit Staff Essentials - New Staff Practical Application: Auditing Accounts Receivable and the Allowance for Credit Losses

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Understanding accounts receivable

Auditing accounts receivable and the related contra account allowance for credit losses is often assigned to new staff. You can familiarize yourself with this audit area by exploring topics, including:

• Professional standards
• Common procedures
• Risk assessment steps relevant to accounts receivable

Knowing the risks

Accounts receivable are high-risk accounts because they are associated with sales and revenue recognition. As such, they are subjective in nature and rely primarily on management estimates. You can gain the knowledge necessary to successfully audit accounts receivable, including:

• How to use audit data analytics to improve the audit
• How careful thought and risk assessment can increase efficiency and effectiveness in the audit process

Applying your new knowledge

You'll practice what you learn in a realistic accounts receivable case study.

Who Will Benefit

• Recently onboarded staff
• First-year staff
• Firms that want consistent training and level setting

Key Topics

• Relevant professional standards related to auditing accounts receivable
• Audit objectives and assertions for accounts receivable
• Risk assessment for accounts receivable
• Allowance for credit losses
• Using audit data analytics

Learning Outcomes

• Recall the audit objectives and related assertions in the accounts receivable area.
• Identify the basic audit procedures over the accounts receivable process, including those surrounding risk and fraud, and apply those procedures to a commonly encountered audit situation.
• Identify the concerns and risks of uncollectible accounts and the common procedures for auditing the allowance for credit losses.
• Recognize the potential of audit data analytics in accounts receivable audit procedures.