CPA · Question 31 · Area III: Performing Procedures
Scenario: An auditor is auditing the allowance for doubtful accounts of a nonissuer. The auditor notes that the company's aging schedule shows a significant increase in receivables over 90 days past due. Management argues that these are due to a few large customers who are 'slow payers but reliable'.<br/><br/>Which of the following procedures provides the MOST persuasive evidence regarding the valuation of these receivables?
Answer options:
Inquiring of the credit manager regarding the collectibility of the accounts.
Reviewing credit reports and subsequent cash receipts for the specific large customers in the >90 days bucket.
Sending positive confirmations to the customers.
Re-aging the accounts receivable to ensure they are classified correctly.
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