Part I. Lernout & Hauspie (L&H) was the world’s leading provider of speech and language technology products, solutions, and services to businesses and individuals worldwide. Both Microsoft and Intel invested millions in L&H. However, accounting scandals and fraud allegations sent the company’s stock crashing and forced the firm to seek bankruptcy protection in Belgium and the United States. The following selected information pertains to L&H’s sales and accounts receivable:
Consolidated revenue increased 184 percent from the 1997 fiscal year to the 1998 fiscal year.
Revenue in South Korea, which has a reputation as a difficult market for foreign companies to enter, increased from $97,000 in the first quarter of 1999 to approximately $59 million in the first quarter of 2000.
In the second quarter of 2000, sales grew by 104 percent but accounts receivable grew by 128 percent.
Average days outstanding increased from 138 days in 1998 to 160 days for the six-month period ended June 30, 2000.
Required:
Based on the above information which assertion for sales would the auditor be most concerned with?
Based on the above information which assertion for accounts receivable would the auditor be most concerned with?