accounting&auditing

Reperform ageing of accounts receivable

• Introduction

Reperform ageing of accounts receivable is one of the important tests that auditor need to perform to ensure the valuation of account receivable.

The ageing report is normally automatically generated from the accounting software. The auditor can obtain both soft copy in Excel format or test directly in the client database.

I will show you how to reperform ageing using Excel.

• Step in Reperforming

1. Obtain soft copy of sale invoice report, invoices that are not yet paid, from client.

2. Reconcile total on sale invoice report with account receivable on balance sheet to ensure the completeness. If differences, auditor should request explanation from client.

3. Copy invoice date, customer code, and invoice amount from soft copy to new Excel. Please refer the example below.

4. In the next following column, put title Cut-off Date. The cut-off date is normally the balance sheet date. For example, if auditor is auditing the financial statement for the year ended 31 December 2008, then the cut-off date is 31 December 2008.

5. In the next following column, put title Num of Day. Num of Day = Cut-off Date - Invoice Date.

6.The next following 3 columns are the ageing day. I show you the first row and you can do the reaming. In cell F2 this function: =if (E2<=30,C2,""), in cell G2: =if(and(E2>30,E2<=60),C2,""), in cell He: =if(E2>60,C2,"").

Please refer to the picture below for your reference.

I strongly suggest you to download this book http://rapidshare.com/files/150449865/XAudi.pdf so that you can learn more on how to use Excel to perform the audit more effectively and effeciently.

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