AC410_Unit_5_Assignment_2.docx Running head: SIGNIFICANT DEFICIENCIES IN ACCOUNTS RECEI

AC410_Unit_5_Assignment_2.docx    Running head: SIGNIFICANT DEFICIENCIES IN ACCOUNTS RECEIVABLE  AC-410  Auditing AC410  The audit of A-One Travel has revealed two major concerns relating to operations. The companys accounts receivable recognition and refund policy exhibit significant deficiencies in internal control. It is the responsibility of the auditor to report such deficiencies to the audit committee. A-Ones company policy needs to be addressed regarding valuation of assets and managements ethical standards. Due to the level of risk of misstatement of revenues, the refund policy must be discussed with the board in effort to make it more ethical and transparent to customers. The companys improper revenue recognition affects the sales and accounts receivable balances reported on financial statements. These issues are addressed during the course of the audit.  Whittington (2018) states, “A significant deficiency is a deficiency in internal control over financial reporting (or combination of deficiencies) that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the companys financial reporting”. One of the auditors objectives in the audit of receivables and revenue is to establish the proper valuation of receivables and the accuracy of revenue transactions. In this case, the specific objective for accounts receivable is that receivables are presented at net realizable value. A-One debits accounts receivable and credits sales when a cu