Exposure Identification and Plan of Action As the manager of the external audit team, you realize that the embedded audit module writes only “material” invoices to the audit file for the accounts...

Exposure Identification and Plan of Action

As the manager of the external audit team, you realize that the embedded audit module writes only “material” invoices to the audit file for the accounts receivable confirmation process. You are immediately concerned that the accounts receivable account may be substantially overstated this year and for the prior years in which this EAM was used.

Required: Explain why you are concerned since all “material” invoices are candidates for confirmation by the customer. Outline a plan for determining if the accounts receivable are overstated.