Case 3
Sales & AR
Ahad Vakil
Michelle Tan
Ng Zheng Wei
Fang ChunChun
Tan Tse Jie
Janice Lai
Yang Yi Chao
Q1. (a) Based on the work performed, are there any
actual or possible material misstatement(s) to sales?
Quantify the misstatement(s) based on the
information provided
Actual Misstatements at Assertion Level
1. Classification
INV/DEC12/665
The consignee PAPL does not own legal rights of the consignment
goods
Revenue from sale of consignment goods is not earned by PAPL and
thus its sales should not be included in the revenue
Overstatement of sales revenue in 2012 by $10,000
INV/DEC12/668
Delivery date of goods delivered to Santa Pte Ltd is 2-Jan-13, which is
after the financial year 2012
However, sales are recognized in Dec 2012 instead of Jan 2013
As sales are recognized at FOB shipping point basis, sales will be
overstated in FY 2012 by $30,000 and understated in FY 2013 by
$30,000
Dr Sales $10,000
Cr Accounts Payable - Maryland $10,000
Reversal of sale of consignment
goods INV/Dec12/665
2. Commission revenue
From sale of consignment inventory