Question 8: Substantive Tests You have been engaged to audit the financial statements of Pump...
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Question 8: Substantive Tests You have been engaged to audit the financial statements of Pump Co Ltd for the financial year ended 30 September 2016. The companys financial statements reflect that Accounts receivable and Sales balances are substantially higher than in previous years. You believe that these balances may be overstated. All sales are made on credit to customers. Required: a) State and explain which assertions are most likely to be at risk of being untrue;(3 marks) b) Briefly explain three audit procedures which are most commonly used to achieve the audit objectives related to Accounts Receivable for these assertions (3 marks) c) Assuming that satisfactory evidence is collected from your tests in (b) above, briefly explain what your preferred approach should be to testing of the Sales account?(2 marks)
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