This week’s material covers receivables/revenues and payables/liabilities. Both areas come with some type of risk. For receivables/revenues, the biggest risks deal with overstatements. For payables/liabilities, the biggest risks deal with understatements.
Find the management discussion and analysis in the Form 10-K of a publicly traded company that interests you. (Post a link so everyone can see it.) What risks does the company identify that might lead to the risk of overstating receivables/revenue or understating payables/liabilities? What specific tests might an auditor design based on those risks?
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