Question

During your audit of NewClient Inc., you noted a significant increase in accounts receivable without a corresponding increase in the allowance for doubtful accounts. This could suggest that management has deliberately understated the allowance for doubtful accounts (or overstated sales/receivables), or made a mistake in the calculation.

You believe that there may be another possible explanation besides deliberate fraud. Indicate two possible explanations and indicate what evidence you would obtain for each explanation to establish whether your explanation is the cause of the difference.

Answer 1

Two explanations

1. If If the manager makes a mistake and he is making a mistake in public: he wants to lose business and the business/company has no use to pay it, and if he does not think of the company,only the thinks for himself.then he has no use to keep the company in company, if he makes mistakes again and again, keep good employees and make progress

2..If there were any mistakes made in the company, then we should check that the mistake was made, after which it should be removed, what is the mistake made by the mistake, baad. He should explain that the mistake would be progressed to the company will be very less in the future and mistake of chances.

Most of two mistake is being in the company so we can solve them and progress the company in thr future