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This posting addresses unusual increases in A/R.

You are the chief audit executive for the internal auditing function of a large municipal hospital. You receive monthly financial reports prepared by the accounting department, and your review of them has shown that total accounts receivable from patients have steadily and rapidly increased over the past eight months.

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Solution Preview

Here is how I would handle each section of your homework study problem.

(A) You can put this into memo form. Let me know if you need help with basic memo forms. The memo structure for an audit would not be any different from a business memo related to other business purposes.

The eight questions that should be contained in the memo to guide and direct the preliminary survey, that include the following categories: (1) who does the A/R accounting, (2) what data processing procedures are in effect, (3) how is A/R accounting done, and (4) what financial and economic events have occurred in the past ten months.

(1) ...

Solution Summary

This solution provides an explanation of how each item would be analyzed.