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CMA Intermediate · Corporate Accounting and Auditing · Audit Sampling, Audit Techniques and Analytical Procedure

An auditor confirms accounts receivable to test existence. A customer paid before the confirmation date, but the client received the cheque shortly after that date. Under SA 530 guidance on sample design, this difference should be:

Such a timing difference is not treated as a misstatement in the existence test of receivables. SA 530 says the auditor must include only conditions relevant to the purpose of the procedure, and payments made before but received just after the confirmation date are not misstatements.

  1. Atreated as a misstatement and projected to the population
  2. Bnot considered a misstatement in evaluating this test's sample resultsCorrect
  3. Ctreated as a misstatement only if the amount is below materiality
  4. Dtreated as proof of management fraud

Explanation

SA 530 explains that the auditor must clearly understand what constitutes a misstatement for the procedure's purpose. Payments made before the confirmation date but received shortly after it are not considered misstatements in an existence test of receivables. So it is excluded from projection.

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