As a control for the assertion of cutoff of cash receipts, a daily exception report is generated for which of the following?

Any recorded cash receipts not supported by the bank remittance report

Any cash receipts posted to the incorrect customers

Any recorded values offash received not supported by an underlying remittance report

Any cash receipts recorded in the incorrect time period

Current Attempt in Progress

Your answer is incorrect.

An auditor's decision whether to apply analytical procedures as substantive tests usually is determined by the

Precision and reliability of the data used to develop expectations.

Extent of accounting estimates used in preparing the financial statements.

Availability of documentary evidence that should be verified.

Number of transactions recorded just before and just after the year$-$end.

Greenside, an audit firm, has chosen to use audit data analytics $($ADA$)$ to assist in the audit of accounts receivable of Fairway Inc., a manufacturer of golf club covers. In performing this analysis, Birdie, the staff auditor, notes that the average collection period for Fairway's customers is $35$ days which approximates its general credit terms of net $30$ days and aligns with the industry average of $38$ days. However, Birdie identifies a notable item as Fairway's largest customer, Bogieville, has an average collection period of $58$ days. In discussion with Fairway's controller, it is noted that due to their relationship with this customer, Bogieville is given net $60-$day terms to pay. How should Birdie react to this information?

Birdie should confirm through reviewing contracts, purchase orders, and$/$or invoices that Bogieville does have net $60-$day terms. If this is verified, the average collection period of $58$ days is within the credit terms and does not appear to indicate a specific risk of uncollectibility. Birdie should document this false positive, and this notable item should not require further response or investigation.

Birdie should confirm through reviewing contracts, purchase orders, and$/$or invoices that Bogieville does have net $60-$day terms. If this is verified, Birdie should be concerned about Bogieville's ability to pay Fairway its full amounts due in a timely manner. Accordingly, Birdie should consider increasing the risk of material misstatement for the valuation of accounts receivable.

Birdie should communicate this discrepancy to the management of Fairway. As a result of this notable item, Greenside should consider whether a qualified audit report should be issued, noting this exception for accounts receivable.

None of these answer choices are correct.

eTextbook and Media

Greenside, an audit firm, has chosen to use audit data analytics $($ADA$)$ to assist in the audit of accounts receivable of Fairway Inc., a manufacturer of golf club covers. In performing this analysis, Birdie, the staff auditor, notes that the average collection period for Fairway's customers is $35$ days which approximates its general credit terms of net $30$ days and aligns with the industry average of $38$ days. However, Birdie identifies a notable item as Fairway's largest customer, Bogieville, has an average collection period of $58$ days. In discussion with Fairway's controller, it is noted that due to their relationship with this customer, Bogieville is given net $60-$day terms to pay. How should Birdie react to this information?

Birdie should confirm through reviewing contracts, purchase orders, and$/$or invoices that Bogieville does have net $60-$day terms. If this is verified, the average collection period of $58$ days is within the credit terms and does not appear to indicate a specific risk of uncollectibility. Birdie should document this false positive, and this notable item should not require further response or investigation.

Birdie should confirm through reviewing contracts, purchase orders, and$/$or invoices that Bogieville does have net $60-$day terms. If this is verified, Birdie should be concerned about Bogieville's ability to pay Fairway its full amounts due in a timely manner. Accordingly, Birdie should consider increasing the risk of material misstatement for the valuation of accounts receivable.

Birdie should communicate this discrepancy to the management of Fairway. As a result of this notable item, Greenside should consider whether a qualified audit report should be issued, noting this exception for accounts receivable.

None of these answer choices are correct.

eTextbook and Media

Current Attempt in Progress

As the audit of Barrow Enterprises draws to its conclusion, one of the audit staff associates, Carrie asks her supervisor Dave why the firm is preparing to perform further analytical procedures. Which of the following responses by Dave is most appropriate to answer this question?

We perform final analytical procedures at the end of the audit to confirm our findings throughout the audit.

The firm performs analytical procedures at the end of the audit to help indemnify the auditors against future l