Clarification details
Updated December 2016. This document has been updated to address issues that have arisen from moderation.
Overall
The report and the processing need to be based on the same entity. Use of an authentic local entity is likely to better engage students. In this case, processing transactions should be re-contextualised from TKI tasks. The nature of the entity will determine the relevance of elements of the accounts receivable subsystem.
Generic knowledge of accounts receivable subsystems
Purpose statements and theoretical/generic statements describing, explaining or justifying best practice within accounts receivable subsystems do not provide evidence for the standard. Strengths, weakness and recommendations for improving the subsystem may provide a context for students, but do not contribute any evidence for the standard. For example, if the firm does not send statements to debtors, this element should not be discussed.
Processing
At Achieved students must enter transactions in an accounts receivable subsidiary ledger, and complete a schedule of accounts receivable and an aged debtors report. Detailed processing, for Merit, requires entries for bad debts and/or sundry charges to debtors. For Excellence, students must also make journal entries for discounts allowed and/or a transposition error between debtors.
Understanding of accounts receivable elements
Explanatory Note 5 lists elements that can be described, explained or justified in the report. The list is not exhaustive; other elements of an accounts receivable subsystem may be discussed if they are relevant to the entity.
In-depth reports explain how or why certain practices take place in the entity. Comprehensive reports make links back to specific transactions and provide clarity as to why that aspect of the subsystem is relevant to the entity. This is because processing is a part of an entity's overall system and should enable the end user to assess the efficiency of the entity’s accounts receivable subsystem.
This standard sits in the Systems strand of the matrix. While students must demonstrate skill in processing, their grades will be based how well they describe, explain or justify relevant elements of the accounts receivable subsystem.