A company's policy requires that all customers be treated in a fair and consistent manner. Which of the following audit procedures would provide the most persuasive evidence that the policy was followed?
A.
Compare the aging of outstanding receivables due from each customer.
B.
Compare credit reports with annual sales for a sample of customers.
C.
Compare the ratio of outstanding receivables to the authorized credit limit for each customer.
D.
Compare the sales discounts offered to each customer.
In my opinion, answers A to C all relate to mainly relates to outstanding receivable. Granted, company collection policy may indicate unfair treatment, other factors outside the Company's influence (i.e. customer's ability to pay) is also at play. Unlike answer D, discount granted is in most cases only influenced by Company's decision, using customer's past performance as basis.
I think the answer states outstanding days, which does not have any relation with customer fair or unfair treatment. Given receivables days will depend of the volume, type of transaction, etc. the customer operates with the company.
Hello Why not A cause giving receivables days difference between customers can also reveal unfair treatment. Thank you
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