Audit Risk Auditor’s response

Discuss with finance director about fraud and what procedures have been carried out.
Review receivables listing to ascertain there are unusual transaction, as there may be extra evidence of fraudulent transactions.
Moreover, audit tem should maintain professional scepticim, be alert to the risk of further fraud and errors.

Company outsourced its receivable ledger processing to external service organization. Detection risk arises as to whether sufficient and appropriate evidence is available to confirm completeness and accuracy of controls.	Discuss with management the extent of records are properly maintained and any monitoring of controls undertaken by management over sales and receivables. In addition, Audit team should contact that service organisation’s auditor to confirm level of controls are in place.
Receivables ledger processing transferred to service organization from 1 February. There is a risk of omission and misstatement. If like these errors occurred, these could result of undervaluing or overvaluing to sales and receivables.	Discuss with management about transfer process and what procedures have been carried out during transferring process. Review balances which before and after transferring date, these balances need to be equal. So, perform substantive testing procedure to ensure transferring process was accurate and completeness.
No supplier statement or payable ledger control account reconciliations have been performed in the period from December 2007 to the year end. There is risk of under or overstating trade and year end payables.	Audit team should perform supplier statement reconciliations, with particular focus on completeness.