You are the audit senior of Wellington Ltd for the year end 31 December 201X, in charge of trade receivables. You are about to start your yearend work and have been given the following extracts by your audit manager for you to consider as part of your planning and analytical review stage. Receivables ledger (ageing extract)

Current 0-30 days £’000 30-60 days £’000 60-90 days £’000 90 days Total £’000

2X11 2,671 1,068 1,068 535 5,342

2X10 1,984 1,190 595 198 3,967

Income statement (extract)

2X11 £’000 2X10 £’000

Turnover 35,451 36,200

Cost of sales (28,715) (27,874)

Gross profit 6,736 8,326

(a) Calculate ratios or percentages that will help your analysis of the sales and trade receivables position for the two years. (b) Explain some of the concerns you have following your initial analysis (in part a) and the resulting potential implications for your audit. (c) You sent out a receivables circularization on the year end balances. Describe the process you would have gone through to do this. (d) Some of the debtors have not responded to your circularization. List the procedures you would now follow for these balances

Question

You are the audit senior of Wellington Ltd for the year end 31 December 201X, in charge of trade receivables. You are about to start your yearend work and have been given the following extracts by your audit manager for you to consider as part of your planning and analytical review stage.
Receivables ledger (ageing extract)

	Current 0-30 days £’000	30-60 days £’000	60-90 days £’000	>90 days	Total £’000
2X11	2,671	1,068	1,068	535	5,342
2X10	1,984	1,190	595	198	3,967

Income statement (extract)

	2X11 £’000	2X10 £’000
Turnover	35,451	36,200
Cost of sales	(28,715)	(27,874)
Gross profit	6,736	8,326

(a) Calculate ratios or percentages that will help your analysis of the sales and trade receivables position for the two years. (b) Explain some of the concerns you have following your initial analysis (in part a) and the resulting potential implications for your audit. (c) You sent out a receivables circularization on the year end balances. Describe the process you would have gone through to do this. (d) Some of the debtors have not responded to your circularization. List the procedures you would now follow for these balances

Quizplus · Accepted Answer

The Answer of You are the audit senior of Wellington Ltd for the year end 31 December 201X, in charge of trade receivables. You are about to start your yearend work and have been given the following extracts by your audit manager for you to consider as part of your planning and analytical review stage. Receivables ledger (ageing extract)

	Current 0-30 days £’000	30-60 days £’000	60-90 days £’000	>90 days	Total £’000
2X11	2,671	1,068	1,068	535	5,342
2X10	1,984	1,190	595	198	3,967

Income statement (extract)

	2X11 £’000	2X10 £’000
Turnover	35,451	36,200
Cost of sales	(28,715)	(27,874)
Gross profit	6,736	8,326

(a) Calculate ratios or percentages that will help your analysis of the sales and trade receivables position for the two years. (b) Explain some of the concerns you have following your initial analysis (in part a) and the resulting potential implications for your audit. (c) You sent out a receivables circularization on the year end balances. Describe the process you would have gone through to do this. (d) Some of the debtors have not responded to your circularization. List the procedures you would now follow for these balances

You Are the Audit Senior of Wellington Ltd for the Year