You Are the Senior in Charge of the Accounts Receivable

question 48

Essay

You are the senior in charge of the accounts receivable section of the audit of a large clothing manufacturer downtown in the clothing district.The client sells to local clothing stores as well as to other retailers in the province.
Accounts receivables seem to be deteriorating,with many more accounts in the over 90 days column than in the past.You sent out twenty accounts receivable confirmations,but only six were returned.Of these six,only three confirmed the balance as in agreement with the client,while the others indicated that they kept their records on an open item basis (rather than a balance forward basis)and were unable to respond to the confirmation request.When you looked at the prior year's file,it seemed that the same thing had happened last year.
When you phoned the supervisor in charge of the audit engagement,she told you to not bother with follow up,as the engagement was already over budget and costs need to be kept down.You were concerned that you would be unable to state a conclusion with respect to the fairness of the accounts receivable balance and she was really angry with you,saying that she would have to sign off for you then.
Required:
Discuss the ethical and quality issues raised by this audit engagement.

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Definitions:

Nonverbal Communication

The process of conveying a message without the use of words, such as through body language, facial expressions, and gestures.

Cultural Stereotypes

Widely held but fixed and oversimplified images or ideas of particular groups of people or cultures.

Collaborative Style

A way of working that emphasizes teamwork, open communication, and joint decision-making to achieve shared goals.

Conflict Management

The practice of recognizing and dealing with disputes in a rational, balanced, and effective way, aiming to reach a resolution that satisfies all parties involved.