Audit Period:

TEST OF CONTROL
1

PSP/Procedure
E
1

Conclusion
We have completed planned worksteps related to Receivables including the substantive proc
supplement for account-specific and sector-specific guidance.

Based on the related RMM and the results of the procedures in this and related areas, we be
for the related assertions and their respective RMM. As a result of completing the procedures
 AUDIT OF ACCOUNTS RECEIVABLE
Index
December 31, 2024

TEST OF CONTROL
Test of Completion of Documents

Balance Sheet A
PSP/Procedure
E
Loans and Other Receivables
Agreement of subledger with general ledger:
Agree receivables subledger to the general ledger control account and investigate p
large and unusual reconciling items.
Confirmation of Receivables
Send out confirmation letters for receivables to confirm their existence, and p
investigate any discrepancies.
Receivable cutoff testing:
p
Test reasonableness of loans receivable recorded 1 month before and 1 month after
yearend.

Summary of Findings

Conclusion
We have completed planned worksteps related to Receivables including the substantive procedures des
supplement for account-specific and sector-specific guidance.

Based on the related RMM and the results of the procedures in this and related areas, we believe that th
for the related assertions and their respective RMM. As a result of completing the procedures, no materi
 Completion Status 75%

FS level (5% of Net In 500,000

Item level (50% of FS 250,000
SAD (5% of FS) 25,000

WP Index
E-T1

Balance Sheet Assertions

WP Index
V C R&OP&D

p p p E01

p E02

p E03

tive procedures described in Audit Firm Methodology

s, we believe that the procedures completed are appropriate

ocedures, no material exceptions were noted.
 ###
December 31, 2024 Audit
AUDIT OF ACCOUNTS RECEIVABLE
Risks of Material Misstatement

OBJECTIVE
To document the assessment of the risks of material misstatement for Accounts Receivable.
To compute for materiality at the item level and determine the level for Key Items.

CONCLUSION
The appropriate risk assessment is High IR, High CR.

WORKING PAPER

Assessment of Inherent Risk: High

See TSSOC_UTP Receivables for the documentation as to this conclusion.

Initial Assessment of Control Risk: Low

See TSSOC_UTP Receivables for the documentation as to this conclusion.

RESULTS OF TEST OF CONTROL

Control Risk reassessed to High. E-T1

Computation of materiality at the item level for substantive testing:

Percentage of Key Item Scopes
Refer to Audit Firm Methodology Section V
Asset/IncomePercentage Liability/Expense
Percentage
RMM
Range to be used Range to be used
Low IR, Low CR 80%-100% 80% 25%-50% 25%
Low IR, High CR 65%-80% 65% 15%-25% 15%
High IR, Low CR 65%-80% 65% 10%-15% 10%
High IR, High CR 40%-65% 50% <10% 5%

Computation of Materiality Levels

FS level (5% of Net Inc 500,000 Refer to TSSOC_Audit Planning
Item level (50% of FS) 250,000
SAD (5% of FS) 25,000
 Completion StatusCompleted

ounts Receivable.

Samples
to be taken
10% of immaterial items
20% of immaterial items
20% of immaterial items
30% of immaterial items
###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Tests of Control
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High

OBJECTIVE
To determine whether controls are actually working, and confirm the appropriateness of the initial

PROCEDURES PERFORMED
Control tested: A transaction must have a Sales Order, Invoice, and Delivery Receipt before it is r
1. Obtain population of all sales made during the year. See E-T1.1 for population used for tests of
2. Selected samples. See E-T1.2 for Sample Selection procedures.
3. Request for the following documents from the client in relation to the samples selected: Sales Or
4. Inspect documents for any anomalies.
5. Documented results and made inquiries when necessary.

CONCLUSION
There is an exception noted in our tests of control. Thus, the Control Risk for Receivable
Refer to RMM for the effect on materiality levels.

WORKING PAPER

E-T1.2
Sales Order # Cust. Name Order Date Invoice # DR Date
001 Kratos 10-Jan 000001 20-Jan
011 Heimdall 9-Feb 000010 N/A
068 Atreus 13-Jun 000068 N/A

TICKMARKS
p The document is available. No exceptions noted.
A There is no Delivery Receipt. Upon inquiry with the client, the customer had
Thus, no exception is noted here.
B There is no Delivery Receipt. The client could not explain the discrepancy.
Thus, an exception has been noted in the Tests of Control.
 Completion Statu Completed

ateness of the initial assessment of control risk as low.

y Receipt before it is recorded.

tion used for tests of control.

les selected: Sales Order, Invoice, and Delivery Receipt.

Risk for Receivables is restated to High.

Legend for Audit Team TESTING:

1 Sales order is available.
2 Invoice is available.
3 Delivery Receipt is available.

Audit Team Testing

1 2 3
p p p
p p A
p p B

t, the customer had picked up the item himself. Thus, no Delivery Receipt is necessary

n the discrepancy.
###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Tests of Control: Population
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High

OBJECTIVE
To document the Population used for Tests of Control related to Accounts Receivable

PROCEDURES PERFORMED
See E-T1 for procedures related to tests of control
See E-T1.2 for sampling selection procedures.
Population: All Sales Orders for the year

WORKING PAPER

Population Produced by Client Nov. 15, 2024

Completion Status Completed
###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Tests of Control: Sample Selection
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High

OBJECTIVE
To document the Population used for Tests of Control related to Accounts Receivable

PROCEDURES PERFORMED
See E-T1 for procedures related to tests of control
Under the Audit Firm's Methodology, 5 samples will be selected. Refer to Audit Firm Methodology S
1. Obtained the population from the client. See E-T1.1 for population.
2. Assigned a Transaction Number for each transaction for purposes of sample selection.
3. Used a Random Number Generator from https://stattrek.com/statistics/random-number-generato
4. Outlined the samples selected by the RNG.
5. Documented results.

WORKING PAPER

l E-T1.1 Population
Trans. Number
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Numbers generated by RNG taken November 15, 2024

Samples extracted from Population According to RNG selection
Sales Order # Cust. Name Order Date Invoice # DR Date
001 Kratos 10-Jan 000001 20-Jan
011 Heimdall 9-Feb 000010 N/A
068 Atreus 13-Jun 000068 N/A

TICKMARKS
l Assigned by Audit Team
 Completion Statu

t Firm Methodology Section VIII for how the number of samples was selected.

e selection.
dom-number-generator to generate samples.

Inputs for RNG taken November 15, 2024

 Completed

# of samples

# of items in population
###
December 31, 2024 Audit
Completion Status Completed

AUDIT OF ACCOUNTS RECEIVABLE FS level (5% of Net Inc 500,000

Agreement of SL and GL Item level (50% of FS) 250,000
SAD (5% of FS) 25,000
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To determine that the Subledger for Accounts Receivable agrees with the General Ledger b

PROCEDURES PERFORMED
1. Obtain subledger for Accounts Receivable as of December 31, 2024 from the client.
2. Computed the total for the subledger
3. Compared the total of the subledger to the December 31, 2024 General Ledger Balance
4. Investigated any discrepancies.

CONCLUSION
No exceptions noted.

WORKING PAPER

Subledger produced by client Nov. 15, 2024

Customer Name Balance
Atreus 340,000
Brok 265,000
Calista 500
Deimos 1,000
Eir 2,500
Freya 260,000
Gna 350,000
Heimdall 8,000
Ingrid 12,000
Jormungandr 121,000
Kratos 85,000
Laufey 270,000
Mimir 360,000
Norns 15,000 Audit Team Testing
Odin 85,000 A Subledger Balance ###
Pandora 91,500 TB General Ledger Bal. ###
Queen 245,000 Difference -
Ratatoskr 325,000
Sindri 73,100
Thor 82,000
Sssh. I'm not supposed to
Total 2,991,600 A be here. "Footed" means
^ recomputing if the given
total in a column is
correct. Some clients
miscompute their totals.
TICKMARKS
^ Footed. No exceptions.
TB Taken from Trial Balance.
eral Ledger b

ger Balance
###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Confirmation
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To test the existence and completeness of Accounts Receivable.

PROCEDURES PERFORMED
1. Obtain subledger for Accounts Receivable as of December 31, 2024. See E02.1
2. Identified key items and selected samples. See E02.2 for the procedures
3. Prepared format for confirmation letters and requested client to prepare letters.
4. Received letters from client then sent by mail to customers.
5. Followed up through e-mail or phone call any customers who have not yet sent responses after 3
6. Received responses from customers and documented responses.
7. Analyzed any differences between the subledger and the customer responses.

CONCLUSION
No exceptions noted.

WORKING PAPER

E02.2 Key Items extracted from SL Customer Details produced by client Nov. 15, 2024
a
Customer Name Balance Address E-mail
Atreus 340,000 Lapasan, CDO Atreus@gmail
Brok 265,000 Gingoog City nunya@gmail
Freya 260,000 Marikina City N/A
Gna 350,000 Gingoog City N/A
Laufey 270,000 Carmen, CDO N/A
Mimir 360,000 Talakag N/A
Ratatoskr 325,000 Malaybalay City N/A

E02.2 Samples extracted from SL Customer Details produced by client Nov. 15, 2024
a
Customer Name Balance Address E-mail
Eir 2,500 Davao City N/A
Jormungandr 121,000 General Santos City N/A
Odin 85,000 Marikina City N/A
Thor 82,000 Gingoog City N/A

TICKMARKS
m Difference immaterial
024. See E02.1 for population.

prepare letters.

ve not yet sent responses after 3 weeks.

mer responses.

ed by client Nov. 15, 2024 Audit Team Monitoring

Cell # Date Letter Sent Date of Follow up

Date Response Received Bal per Co
09112223333 1-Dec-24
09112223332 1-Dec-24
09112223335 1-Dec-24
09112223547 1-Dec-24
09182012956 1-Dec-24
09541258425 1-Dec-24
09341257859 1-Dec-24

ed by client Nov. 15, 2024 Audit Team Monitoring

Cell # Date Letter Sent Date of Follow up

Date Response Received Bal per Co
N/A 1-Dec-24
09241285472 1-Dec-24
09159402112 1-Dec-24
09952221345' 1-Dec-24
 Completion Status 50%

FS level (5% of Net In 500,000

Item level (50% of FS 250,000
SAD (5% of FS) 25,000

Audit Team Testing

b c = a-b
Bal per Confirmation
Diff. with SLNotes
340,000
265,000
260,000
350,000
270,000
360,000
325,000

Audit Team Testing

b c = a-b
Bal per Confirmation
Diff. with SLNotes
2,500
121,000
85,000
82,000
###
December 31, 2024 Audit
Completion Status Completed

AUDIT OF ACCOUNTS RECEIVABLE FS level (5% of Net In 500,000

Confirmation: Population Item level (50% of FS 250,000
SAD (5% of FS) 25,000
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To document the Population used for Confirmation of Accounts Receivable

PROCEDURES PERFORMED
See E02 for procedures related to Confirmation
See E02.2 for sampling selection procedures.

WORKING PAPER

Subledger produced by client Nov. 15, 2024

Customer Name Balance
Atreus 340,000
Brok 265,000
Calista 500
Deimos 1,000
Eir 2,500
Freya 260,000
Gna 350,000
Ingrid 12,000
Jormungandr 121,000
Kratos 85,000
Laufey 270,000
Mimir 360,000
Norns 15,000
Odin 85,000
Pandora 91,500
Queen 245,000
Ratatoskr 325,000
Sindri 73,100
Thor 82,000
2,991,600
ompleted
###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Confirmation: Population
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To document the Sampling Selection for Confirmation

PROCEDURES PERFORMED
See E02 for procedures related to confirmation.
Under the Audit Firm's Methodology, 30% of nonmaterial items will be taken as samples.
Refer to RMM for full details on sampling and basis of key item materiality.
1. Obtained the population from the client. See E02.1 for population.
2. Extracted Key Items from the Population.
3. Assigned a Transaction Number for immaterial items for purposes of sample selection.
4. Used a Random Number Generator from https://stattrek.com/statistics/random-number-generato
5. Outlined the samples selected by the RNG.
6. Documented results.

WORKING PAPER

E02.1 Population Audit Team determination

Customer Name Balance Key item?
Atreus 340,000 Yes
Brok 265,000 Yes
Calista 500 No
Deimos 1,000 No
Eir 2,500 No
Freya 260,000 Yes
Gna 350,000 Yes
Ingrid 12,000 No
Jormungandr 121,000 No
Kratos 85,000 No
Laufey 270,000 Yes
Mimir 360,000 Yes
Norns 15,000 No
Odin 85,000 No
Pandora 91,500 No
Queen 245,000 No
Ratatoskr 325,000 Yes
 Sindri 73,100 No
Thor 82,000 No
2,991,600

Key items extracted by Audit Team from Population Immaterial items extracted by Audit Team fr
Customer Name Balance l
Atreus 340,000 Trans. Number
Customer Name
Brok 265,000 1 Calista
Freya 260,000 2 Deimos
Gna 350,000 3 Eir
Laufey 270,000 4 Heimdall
Mimir 360,000 5 Ingrid
Ratatoskr 325,000 6 Jormungandr
7 Kratos
8 Norns
9 Odin
10 Pandora
11 Queen
12 Sindri
13 Thor

Items in Population:
% as samples:
Number of samples:
Inputs for RNG taken November 15, 2024

# of samples

# of items in population

Numbers generated by RNG taken Novem

Samples extracted from Population According to RNG selection

Trans. Number
Customer Name Balance
3 Eir 2,500
6 Jormungandr 121,000
9 Odin 85,000
13 Thor 82,000

TICKMARKS
l Assigned by Audit Team
 Completion Status Completed

FS level (5% of Net Inc ###

Item level (50% of FS) ###
SAD (5% of FS) 25,000

aken as samples.

sample selection.
s/random-number-generator to generate samples.
extracted by Audit Team from Population

Balance
500
1,000
2,500
8,000
12,000
121,000
85,000
15,000
85,000
91,500
245,000
73,100
82,000

13
30%
4
Note: Rounded to nearest whole number.

rated by RNG taken November 15, 2024

###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Cutoff Testing
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To test whether Accounts Receivable are recorded in the correct period.

PROCEDURES PERFORMED
1. Obtain a list of sales made from December 1, 2024 to December 31, 2024, and for January 1, 20
2. Identified key items and selected samples. See E03.2 for the procedures
3. Requested for the following documents from the client: Sales Invoice, Journal Voucher, Delivery R
4. Inspected the shipping terms on the Bill of Lading or the Delivery Receipt
5. Inspected the date shipped on the Bill of Lading for FOB Shipping Point transactions
6. Inspected the date delivered on the Delivery Receipt for FOB Destination transactions
7. Inspected the date of the Journal Voucher to determine when the transaction is recorded
8. Analyzed whether the transaction is recorded in the correct period according to the shipping term
9. Documented results and made inquiries when necessary.

CONCLUSION
Misstatements were noted, although they were immaterial.
We have proposed adjustments for misstatements above SAD and noted whether they h

WORKING PAPER

Population 1: Sales recorded in December 2024

E03.2 Samples extracted Audit Team Testing

q 2

FOB Terms Date Shipped

Date Delivered
Customer Name Balance
Heimdall 4,200 FOB Shipping Point Dec. 21, 2024 Dec. 30, 2024
Gna 22,000 FOB Destination Dec. 12, 2024 Dec. 21, 2024
Mimir 121,000 FOB Destination Dec. 21, 2024 Jan. 8, 2025

Population 2: Sales recorded in December 2025

E03.2 Samples extracted Audit Team Testing

q 2
 FOB Terms Date Shipped
Date Delivered
Customer Name Balance
Deimos 6,000 FOB Shipping Point Jan. 2, 2025 Jan. 7, 2025
Eir 9,000 FOB Destination Dec. 31, 2024 Jan. 5, 2025
Atreus 31,000 FOB Destination Dec. 21, 2024 Dec. 28, 2024

Analysis of Misstatements:

Customer Name Balance

Mimir 121,000 1
Eir 9,000 2
Atreus 31,000 3
Total 161,000 m

TICKMARKS
q Details obtained from inspection of Bill of Lading
2 Details obtained from inspection of Delivery Receipt
1 Details obtained from Journal Voucher
m Difference immaterial
A The transaction is recorded in the wrong period.
The misstatement is not material but is above SAD.
Thus, the following journal entry was proposed to the client to correct this:
Sales 121,000
Accounts Receivable 121,000

The client has accepted the adjusting entry.

We have verified that the adjusting entry is properly reflected in the client's books
and in the Adjusted Trial Balance.

B The transaction is recorded in the wrong period.

The transaction is below SAD of P25,000. No adjusting entry is necessary.
 Completion Status Completed

FS level (5% of Net Inc 500,000

Item level (50% of FS) 250,000
SAD (5% of FS) 25,000

nd for January 1, 2025 to January 31, 2025. See E03.1 for population.

l Voucher, Delivery Receipt, Bill of Lading

nsactions
n is recorded
to the shipping terms and the relevant dates

ed whether they have been accepted by the client.

Audit Team Monitoring

1
Correct Period Period Trans.
Relevant Date for
to Record actually Notes
recording
Trans. Recorded
Date Shipped 2024 2024
Date Delivered 2024 2024
Date Delivered 2025 2024 A 1

Audit Team Monitoring

1
 Correct Period Period Trans.
Relevant Date for
to Record actually Notes
recording
Trans. Recorded
Date Shipped 2025 2025
Date Delivered 2024 2025 B 2
Date Delivered 2024 2025 B 3

Since all the misstatements are immaterial,

it is not necessary to make adjusting
entries.
However, many audit firms use a third level of materiality (here it
is called the "SAD") used to "project" if all of the material
misstatements in various accounts become material. For example,
correct this: substantive testing for Sales may also affect AR so the total
misstatements between here and in the Sales testing might not
actually be immaterial.

Thus, in practice, adjustments are proposed for misstatements

above SAD even if they are below Key Item materiality.
n the client's books However, if those adjustments are not accepted by the client,
the audit opinion would still be unmodified since they are not
material.
This speech bubble is too big I'll get discovered...

necessary.
###
December 31, 2024 Audit
Completion Status Completed

AUDIT OF ACCOUNTS RECEIVABLE FS level (5% of Net In 500,000

Cutoff Testing Item level (50% of FS 250,000
SAD (5% of FS) 25,000
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To document the Population used for Cutoff Testing of Accounts Receivable

PROCEDURES PERFORMED
See E03 for procedures related to Cutoff Testing
See E03.2 for sampling selection procedures.

WORKING PAPER

Population 1: Sales recorded in December 202 Population 2: Sales recorded in January 2

List produced by client Nov. 15, 2024 List produced by client Nov. 15, 2024
Customer Invoice Amount Customer Invoice Amount
Atreus 150,000 Kratos 120,000
Odin 200,000 Laufey 80,000
Freya 38,000 Norns 115,000
Heimdall 4,200 Norns 20,000
Mimir 26,000 Calista 40,000
Freya 18,000 Deimos 6,000
Gna 22,000 Ratatoskr 210,000
Brok 70,000 Gna 15,000
Mimir 121,000 Atreus 31,000
rded in January 2025
15, 2024
e Amount
###
December 31, 2024 Audit

AUDIT OF ACCOUNTS RECEIVABLE

Cutoff Testing: Sampling
Audit Period: December 31, 2024

SUMMARY OF RISK ASSESSMENT

Fraud Risk None
Inherent Risk High
Control Risk High

OBJECTIVE
To document the Sampling Selection for Cutoff Testing

PROCEDURES PERFORMED
See E03 for procedures related to Cutoff Testing
Under the Audit Firm's Methodology, 30% of nonmaterial items will be taken as samples.
Refer to RMM for full details on sampling and basis of key item materiality.
1. Obtained the population from the client. See E03.1 for population.
Note: since this is cutoff testing, two populations are used.
2. Extracted Key Items from the Population.
3. Assigned a Transaction Number for immaterial items for purposes of sample selection.
4. Used a Random Number Generator from https://stattrek.com/statistics/random-number-generato
5. Outlined the samples selected by the RNG.
6. Documented results.

WORKING PAPER

Population 1: Sales recorded in December 2024

E03.1 Population Audit Team determination
Customer Invoice AmountKey item?
Atreus 150,000 No
Odin 200,000 No
Freya 38,000 No
Heimdall 4,200 No
Mimir 26,000 No
Freya 18,000 No
Gna 22,000 No
Brok 70,000 No
Mimir 121,000 No

There are no key items. All transactions will form part of the population for sampling purposes.

Immaterial items extracted by Audit Team from Population

l
Trans. Number
Customer Name Balance
 1 Atreus 150,000
2 Odin 200,000
3 Freya 38,000
4 Heimdall 4,200
5 Mimir 26,000
6 Freya 18,000
7 Gna 22,000
8 Sindri 18,000
9 Brok 70,000
10 Mimir 121,000

Items in Population: 10
% as samples: 30%
Number of samples: 3
Note: Rounded to nearest whole number.

Inputs for RNG taken November 15, 2024

# of samples

# of items in population

Numbers generated by RNG taken Novem

Samples extracted from Population According to RNG selection

Trans. Number Customer Name Balance
4 Heimdall 4,200
7 Gna 22,000
10 Mimir 121,000
Population 2: Sales recorded in January 2025
E03.1 Population Audit Team determination
Customer Invoice AmountKey item?
Kratos 120,000 No
Laufey 80,000 No
Norns 115,000 No
Norns 20,000 No
Calista 40,000 No
Deimos 6,000 No
Ratatoskr 210,000 No
Eir 9,000 No
Gna 15,000 No
Atreus 31,000 No

There are no key items. All transactions will form part of the population for sampling purposes.

Immaterial items extracted by Audit Team from Population

l
Trans. Number
Customer Name Balance
1 Kratos 120,000
2 Laufey 80,000
3 Norns 115,000
4 Norns 20,000
5 Calista 40,000
6 Deimos 6,000
7 Ratatoskr 210,000
8 Eir 9,000
9 Gna 15,000
10 Atreus 31,000

Items in Population: 10
% as samples: 30%
Number of samples: 3
Note: Rounded to nearest whole number.

Inputs for RNG taken November 15, 2024

# of samples

# of items in population
 Numbers generated by RNG taken Novem

Samples extracted from Population According to RNG selection

Trans. Number Customer Name Balance
6 Deimos 6,000
8 Eir 9,000
10 Atreus 31,000

TICKMARKS
l Assigned by Audit Team
 Completion Status Completed

FS level (5% of Net Inc ###

Item level (50% of FS) ###
SAD (5% of FS) 25,000

aken as samples.

sample selection.
s/random-number-generator to generate samples.

for sampling purposes.

ems in population

rated by RNG taken November 15, 2024

for sampling purposes.

ems in population
rated by RNG taken November 15, 2024