Risk of overstating receivables/revenue
• Sensitive to economic changes
• Disruption in international supply chain
• Revenue includes credit sales
• protection plans
Audit test
• Determine if there is a plan in place for economic changes
• How is severe weather planned and accounted for
• Is there a plan for interruptions in the supply chain
• Examine previous years to determine if a possible write off value is being used
before including sales in revenue
• Determine protection plan usage and determine if there is an allowance for this
prior to including in revenue
Risk of Understating payables/liabilities
• Timing of recording purchases
• Lowe's is self ensured, a significant amount of judgement is required
to ensure appropriate amounts are reserved
Testing
• Testing should include evaluating when purchase are recorded.
• Evaluate previous years requirements to ensure that appropriate
amounts are reserved.
Link
https://otp.tools.investis.com/clients/us/lowes_companies_inc/SEC/sec-
show.aspx?FilingId=15673453&Cik=0000060667&Type=PDF&hasPdf=1
Lowe's, 2021, SEC 10K, 2021 Annual
report,https://otp.tools.investis.com/clients/us/lowes_companies_in
c/SEC/sec-
show.aspx?FilingId=15673453&Cik=0000060667&Type=PDF&hasP
df=1
