Some customers do not return confirmations, so alternative procedures must be followed. The alternative procedures aim to define – appealing to methods that are not primary – if the unconfirmed invoice was not a fictitious one (Accounting Tools, 2021). If there is no required confirmation, the approaches below may be considered to validate and evaluate the individual trades that make up the final receivable balance.
First is the subsequent cash disbursements. The auditor reviews the evidence of receipt of money after the date of confirmation, notification of transfers, as well as the data recorded in the register of cash receipts or even the following loans reflected in the analytical accounting of receivables (PCAOB, 2021). It should be admitted that checking evidence of subsequent cash disbursements is a beneficial alternative procedure since it is fair to suggest that the customer did not pay if the invoice was fictitious. Nevertheless, the present income does not say anything about whether this obligation was dated on the day indicated in the confirmation. This example can be met in the service sector more frequently.
Second, it might be duplicate invoices for sales. They are useful in checking the reality of the invoice for implementation and the validity of the date of the invoice. Third, it is transport documents. They are important in establishing the fact of a shipment and in checking time allocations (Sherman, n.d.). The two latter examples can be easily met in the manufacturing sector. It seems reasonable to state that alternative procedures in the given framework are a good option to undertake, given the number of issues that they can address. It is generally best to follow these procedures in any case of an unconfirmed balance, even when the amount is immaterial.
References
Accounting Tools. (2021). Alternative procedures definition. Web.
PCAOB. (2021). AU section 330: The confirmation Process. Web.
Sherman, F. (n.d.). Alternative audit procedures. Chron. Web.