Oceanview Marine Company 21-3 Audit Program — Accounts Receivable

December 31, 2018

AUDIT PROCEDURES * W/P INIT COMMENTS

MODIFICATIONS TO AUDIT PROGRAM

1. Based on the results of previous audit procedures, complete the Planned Tests of Balances Matrix for accounts receivables and, if necessary, make appropriate modifications to this audit program.

No modifications of audit program deemed necessary.

TESTS OF BALANCES

2. Obtain an aged listing of accounts receivable as of year-end and:

(a) foot the listing and crossfoot totals. (b) trace total of aged receivables to the general

ledger. (c) trace entries for individual customers from the

aging analysis to the individual accounts in the accounts receivable subsidiary records.

D D

D

21-7 to

21-9

BC

No exceptions.

3. Perform confirmations of accounts receivable. Verify by confirmation or alternative means all accounts selected for confirmation. (a) determine sample size for confirmation

testing. (b) select individual accounts for confirmation

testing. (c) evaluate differences between receivable

balances and confirmation responses (or alternative procedures). Determine whether differences are valid timing differences or misstatements.

(d) generalize misstatements to the population of accounts receivable and evaluate acceptability of the population.

A E

4. Review allowance for bad debts and: (a) discuss with management whether the

allowance amount is adequate. (b) review payments received after year end. (c) prepare an analysis of the allowance account

and compare to the general ledger.

A

Co

Rv

21-15 and

21-16

BC Adjustments required as noted on W/P 21-2.

* Audit Objectives: Accuracy Classification Completeness Cutoff Detail tie-in Existence Presentation and disclosure Realizable value Rights and obligations

Oceanview Marine Company 21-4 Audit Program — Accounts Receivable (continued) BC 2/05/2019

December 31, 2018 * W/P INIT COMMENTS

AUDIT PROCEDURES

5. Investigate any material credit balances and re-classify as accounts payable.

A P Ro

BC N/A. No credit balances.

6. Review control account for unusual postings. A Co BC Reviewed for entire year. All entries appear to be routine.

7. Physically inspect all notes receivable in the client’s possession.

A Co Ro

BC N/A. None.

8. Review minutes, agreements, and bank confirmation to determine if any accounts or notes have been assigned, pledged or discounted.

Ro 20-7 BC A/R pledged as security for bank loan.

9. Review accounts receivable cut-off. Cu BC Last sales invoice #8801. Item was not in inventory listing.

10. Trace subsequent receipts to outstanding accounts receivable.

A Co BC No exceptions found.

Other procedures:

BC None.

ANALYTICAL PROCEDURES

11. Analyze the relationship between receivables and sales, and compare with relationships for the preceding year(s).

Rv BC Differences not significant.

12. Review the aged accounts receivable trial balance and compare to prior periods.

Rv 21-9 BC Differences not significant.

13. Compare sales returns and allowances as a percentage of gross sales with previous years.

Rv BC 2018 — 0.1% 2017 — 0.1% No difference.

14. Compare individual customer balances over a stated amount with previous years.

Rv BC N/A. Larger accounts are for boat sales that are not repeated by same customer from year to year.

15. Compare bad debts as a percentage of net sales with previous years.

Rv 21-16 BC Differences not significant.

16. Compare the number of days accounts receivable are outstanding with previous years.

Rv 2-1 BC Differences not significant.

* Audit Objectives: Accuracy Classification Completeness Cutoff Detail tie-in Existence Presentation and disclosure Realizable value Rights and obligations

Oceanview Marine Company 21-5 Audit Program — Accounts Receivable (continued)

December 31, 2018 * W/P INIT COMMENTS

AUDIT PROCEDURES

17. Compare aging categories as a percentage of accounts receivable with previous years.

Rv BC Differences not significant.

18. Compare allowance for bad debts as a percentage of accounts receivable to previous years.

Rv 21-16 BC Difference not significant.

Other procedures:

BC None

STATEMENT PRESENTATION

19. Verify that any encumbrances are appropriately disclosed.

P BC A/R pledged to bank. Note to financial statements required.

20. Verify that there is segregation of accounts and notes receivable and any long-term receivables.

C P BC N/A. No long-term receivables.

21. Inquire whether there are any receivables from related parties.

P BC None. Inquired of Cynthia and reviewed AR listing.

Other procedures: BC None

CONCLUSION

22. State, in your opinion, if the notes and accounts receivable reported in the financial statements are fairly presented and are in accordance with GAAP.

* Audit Objectives: Accuracy Classification Completeness Cutoff Detail tie-in Existence Presentation and disclosure Realizable value Rights and obligations

1. 213Row1:
2. complete the Planned Tests of Balances Matrix for:
3. 217 to 219A E:
4. BCA E:
5. complete the Planned Tests of Balances Matrix for2:
6. 215Row1:
7. receivable reported in the financial statements are: