Reference no: EM132086348

Question: You work for a large accounting firm which has seventy offices around the United States, plus more outside the United States. The client company where you are working on an audit uses a series of lockboxes around the country. For each of the lockboxes, the client receives a transmission of information which was prepared by the bank. The information shows:date received, date credited (almost always the same as date received), amount received and invoice number(s) against which the payment should be applied. Your client company uses this information to apply payments to customers' balances. The date information is also used to determine when customers' payments are received late, thus resulting in imposition of finance charges.

As part of your confirmation of accounts receivable, you got back a letter from one of the client's customers that said that the client was imposing finance charges even though the customer was paying on time, so that no finance charge should be imposed. The customer said it was taking an average of nine days from the time of mailing for its payments to be credited against its account. You asked the bank which operates the lockbox to send you the remittance advices for ten of the client's customers, including the customer who had sent you this information as part of the confirmation. The bank replied that it routinely destroyed those remittance advices after it had processed the payments. Therefore, those remittance advices are not available.

What do you do now? Why? Tell me your reasoning in an idiotproof, bulletproof manner.