In an engagement to review the financial statements of a nonpublic​ company, SSARS require the accountant to obtain review evidence that is primarily based on inquiries and analytical procedures. The nature of the​ accountant's inquiries is a matter of judgment. For​ example, the accountant may consider the nature and materiality of the​ items, likelihood of​ misstatement, how the items may be affected by​ management's judgment, qualifications of client​ personnel, among other matters. Below are several inquiry procedures for the sales and collection​ cycle:
What other information about accounts receivable and revenue, besides the items listed, will the accountant have to obtain?
1) Obtain direct confirmation of accounts receivable and perform alternative procedures for nonresponses.
2) Perform analytical procedures
3) Inquiry about whether the accounts receivable control account has been reconciled with the master file records.
4) Obtain an analysis of the allowance for doubtful accounts and bad debt expense: test accuracy, examine authorization for write-offs, and trace to general ledger.
5) Understand the client's business
6) Obtain an aged list of receivables: trace accounts to the master file, foot schedule, and trace to general ledger.
7) Inquiry about the possibility of unbilled sales
8) Inquiry about the possible inclusion of consignment shipments as sales.
9) Inquiry about the authorization procedures for sales
10) Perform tests to determine that proper cutoff procedures were applied at the balance sheet date to ensure that sales, cash receipts, and credit memos have been recorded in the correct period.