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Chapter 07 - Revenue and Collection Cycle
7-1
CHAPTER 7
Revenue and Collection Cycle
LEARNING OBJECTIVES
Review
Checkpoints
Exercises,
Problems, and
Simulations
1. Discuss inherent risks related to the revenue
and collection cycle with a focus on improper
revenue recognition.
1, 2, 3 59
2. Describe the revenue and collection cycle,
including typical source documents and
controls procedures.
4, 5, 6, 7, 8 54,55,61, 63, 64,
66
3. Give examples of tests of controls over
customer credit approval, delivery, and
accounts receivable accounting.
9, 10, 11, 12, 13,
14
56, 65
4. Give examples of substantive procedures in
the revenue and collection cycle and relate
them to assertions about account balances at
the end of the period.
15, 16, 17, 18, 19,
20, 21, 22
60, 61, 67, 68, 69,
70
5. Describe some common errors and frauds in the
revenue and collection cycle, and design some
audit and investigation procedures for detecting
them.
23, 24, 25 26, 27,
28
59, 62, 65, 71
SOLUTIONS FOR REVIEW CHECKPOINTS
7.1 Revenue recognition refers to including revenue in the financial statements. According to GAAP, this is
done when revenues are (1) realized or realizable and (2) earned.
7.2 Revenue recognition is used as a primary means for inflating profits for several reasons. First, it is not
always straightforward when revenues have been earned. Sales can be structured with return provisions, or
can have other performance provisions attached. Second, the timing of shipments at year end may be easy
to falsify. Third, markets often value companies based on a multiple of its revenue instead of net income.
7.3 New companies often do not show a profit during their first few years. Therefore, creditors and investors
often place more emphasis on the revenues, especially looking for revenue growth that might lead to future
profitability. Knowing this management may try to inflate revenues.

7-2
7.4 The basic sequence of activities and accounting in a revenue and collection cycle is:
1. Receiving and processing customer orders. Entering data in an order system and obtaining a credit
check.
2. Delivering goods and services to customers. Authorizing release from storekeeping to shipping to
customer. Entering shipping information in the accounting system.
3. Billing customers, producing sales invoices. Accounting for customer trade accounts receivable.
4. Collecting cash and depositing it in the bank. Accounting for cash receipts.
5. Reconciling bank statements.
7.5 When documents such as sales orders, shipping documents, and sales invoices are prenumbered, someone
can later account for the numerical sequence and determine whether any transactions have failed to be
recorded. (Completeness assertion.)
7.6 Access to computer terminals should be controlled so only authorized persons can enter or change
transaction data. Access to master files is important because changes in them affect automatic computer
controls, such as credit checking and accurate inventory pricing.
7.7 Auditors could examine these files for evidence of:
• Unrecorded sales — pending order master file,
• Inadequate credit checks — credit data/check files
• Incorrect product unit prices — price list master file
7.8 With a sample of customer accounts receivable:
1. Find the support for debit entries in the sales journal file. Expect to find evidence (copy) of a sales
invoice, shipping document, and customer order. The sales invoice indicates the shipping date.
2. Find the support for credit entries in the cash receipts journal file. Expect to find a remittance
advice (entry on list), which corresponds to detail on a deposit slip, on a deposit actually in a bank
statement for the day posted in the customers’ accounts.
7.9 The account balances in a revenue and collection cycle include:
• Cash in bank
• Accounts receivable
• Allowance for doubtful accounts
• Bad debt expense
• Sales revenue
• Sales returns, allowances, discounts
7.10 These specific control procedures (in addition to separation of duties and responsibilities) should be in
place and operating in a control system governing revenue recognition and cash accounting:
1. No sales order should be entered without a customer order.
2. A credit-check code or manual signature should be recorded by an authorized means.
3. Access to inventory and the shipping area should be restricted to authorized persons.
4. Access to billing terminals and blank invoice forms should be restricted to authorized personnel.

7-3
5. Accountants should be instructed to record sales and accounts receivable when all the supporting
documentation of shipment is in order, and care should be taken to record sales and receivables as
of the date goods and services were shipped, and cash receipts on the date the payments are
received
6. Customer invoices should be compared with bills of lading and customer orders to determine that
the customer is sent the goods ordered at the proper location for the proper prices and that the
quantity being billed is the same as the quantity shipped
7. Pending order files should be reviewed timely to avoid failure to bill and record shipments
8. Bank statements should be reconciled in detail monthly.
7.11 In a “walk through” of a sales transaction, auditors take a small sample (usually 1 – 3 items) of a sales
transaction and trace it from the initial customer order through credit approval, billing, and delivery of
goods, to the entry in the sales journal and subsidiary accounts receivable records, then its subsequent
collection and cash deposit. Sample documents are collected, and employees in each department are
questioned about their specific duties. The information gained from documents and employees can be
compared to answers obtained on an internal control questionnaire. The purpose of the “walk through” is to
obtain an understanding of the transaction flow, the control procedures, and the populations of documents
that may be utilized in tests of controls.
7.12 The assertions made about classes of transactions and events in the revenue and collection cycle are:
1. Sales and related events that have been recorded have occurred and pertain to the entity.
2. All sales and related events that should have been recorded have been recorded.
3. Amounts and other data related to sales transactions and events have been recorded properly.
4. Sales and related events have been recorded in the correct period.
5. Sales and related events have been recorded in the proper accounts.
7.13 In general, the “actions” in tests of controls involve vouching, tracing, observing, scanning, and
recalculating.
7.14 Dual direction tests of controls refers to procedures that test file contents in two “directions” — the
occurrence direction and the completeness direction. The occurrence direction is a sample from the account
balance (e.g. sales revenue) vouched to supporting sales and shipping documents for evidence of
occurrence. The completeness direction is a sample from the population that represents all sales (e.g.
shipping document files) traced to the sales journal or sales account for evidence that no transactions
(shipments, sales) were omitted.
7.15 It is important to place emphasis on the existence assertion because auditors have often gotten into
malpractice trouble by giving unqualified reports on financial statements that overstated assets and
revenues and understated expenses. For example, credit sales recorded too early (e.g. maybe a fictitious
sale) result in overstated accounts receivable and overstated sales revenue.
7.16 These procedures are usually the most useful for auditing the existence assertion:
Confirmation. Letters of confirmation can be sent to customers, asking for a report of the balances owed to
the company
Verbal Inquiry. Inquiries to management usually do not provide very convincing evidence about existence
and ownership. However, inquiries should always be made about the company’s agreements to pledge or
sell with recourse accounts receivable in connection with financings.

7-4
Examination of Documents (Vouching). Evidence of existence can be obtained by examining shipping
documents. Examination of loan documents may yield evidence of the need to disclose receivables pledged
as loan collateral.
Scanning. Assets are supposed to have debit balances. A computer can be used to scan large files of
accounts receivable, inventory, and fixed assets for uncharacteristic credit balances. The names of debtors
can be scanned for officers, directors, and related parties, amounts for which need to be reported separately
or disclosed in the financial statements.
Analytical Procedures. Comparisons of asset and revenue balances with recent history might help detect
overstatements. Relationships such as receivables turnover, gross margin ratio, and sales/asset ratios can be
compared to historical data and industry statistics for evidence of overall reasonableness. Account
interrelationships also can be used in analytical review. For example, sales returns and allowances and sales
commissions generally vary directly with dollar sales volume, bad debt expense usually varies directly with
credit sales volume, and freight expense varies with the physical sales volume. Accounts receivable
write-offs should be compared with earlier estimates of doubtful accounts.
7.17 Comparison of sales and accounts receivable to previous periods provides information about existence.
Other useful analytical procedures include receivables turnover and days of sales in receivables, aging,
gross margin ratio, and sales/asset ratios, which can be compared to historical data and industry statistics
for evidence of overall reasonableness. Auditors may also compare sales to non-financial data such as units
sold, number of customers, sales commissions, etc. These comparisons can be made by product, period,
geographic region, or salesperson.
7.18 A “positive” confirmation is a request for a response from an independent party whom the auditor has
reason to expect is able to reply. A “negative” confirmation is a request for a response from the
independent party only if the information is disputed. Negative confirmations should be sent only if the
recipient can be expected to detect an error and reply accordingly. They are normally used for accounts
with small balances when control risk is low.
7.19 Justifications for the decision not to use confirmations for trade accounts receivable in a particular audit
include: (1) receivables are not material, (2) confirmations would be ineffective, based on prior years’
experience or knowledge that responses could be unreliable, and (3) analytical procedures and other
substantive procedures provide sufficient, competent evidence.
7.20 Auditors need to take special care in examining sources of accounts receivable confirmation responses.
Auditors need to control the confirmations, including the addresses to which they are sent. History is full
of cases where confirmations were mailed to company accomplices, who provided false responses. The
auditors should carefully consider features of the reply such as postmarks, FAX and telegraph responses,
letterhead, electronic mail, telephone, or other characteristics that may give clues to indicate false
responses. Auditors should follow up electronic and telephone responses to determine their origin (for
example, returning the telephone call to a known number, looking up telephone numbers to determine
addresses, or using a criss-cross directory to determine the location of a respondent).
7.21 When positive confirmations are not returned the auditor should perform the following procedures:
1. Send second and even third requests.
2. Apply subsequent cash receipts.
3. Examine sales orders, invoices and shipping documents, and
4. Examine correspondence files for past due accounts.

7-5
7.22 To determine the adequacy of the allowance for doubtful accounts, the auditor reviews subsequent cash
receipts from the customer, discusses unpaid accounts with the credit manager and examines the credit
files. These should contain customer’s financial statements, credit reports, and correspondence between the
client and the customer. Based on this evidence, the auditor estimates the likely amount of non-payment for
the customer, which is included in the estimate of the allowance for doubtful accounts. In addition, an
allowance should be estimated for all other customers, perhaps as a percentage of the current accounts and
a higher percentage of past due accounts. The auditor compares his/her estimate to the balance in the
allowance account and proposes an adjusting entry for the difference.
7.23 Dual-direction testing involves selecting samples to obtain evidence about control over completeness in one
direction and control over occurrence in the other direction. The completeness direction determines
whether all transactions that occurred were recorded (none omitted), and the occurrence direction
determines whether recorded transactions actually occurred (were valid). An example of the completeness
direction is the examination of a sample of shipping documents (from the file of all shipping documents) to
determine whether invoices were prepared and recorded. An example of the occurrence direction is the
examination of a sample of sales invoices (from the file representing all recorded sales) to determine
whether supporting shipping documents exist to verify the fact of an actual shipment. The content of each
file is compared with the other.
7.24 In the “Canny Cashier” case, if someone other than the assistant controller had reconciled the bank
statement and compared the details of bank deposit slips to cash remittance reports, the discrepancies could
have been noted and followed up. The discrepancies were that customers and amounts on the two did not
match.
7.25 To prevent the cash receipts journal and recorded cash sales from reflecting more than the amount shown
on the daily deposit slip, the internal control system should provide that receipts be recorded daily and
intact. A careful bank reconciliation by an independent person could detect such errors.
7.26 Confirmations to taxpayers who had actually paid their taxes would have produced exceptions, complaints,
and people with their counter receipts. These results would have revealed the embezzlement.
7.27 Auditors might have obtained the following information:
Inquiries: Personnel admitting the practices of backdating shipping documents in a “bill and hold” tactic, or
personnel describing the 60-day wait for a special journal entry to record customer discounts taken.
Tests of controls: The sample of customer payment cash receipts would have shown no discount
calculations and authorizations, leading to inquiries about the manner and timing of recording the
discounts.
Observation: When observing the physical inventory-taking, special notice should be taken of any goods on
the premises but excluded from the inventory. These are often signs of sales recorded too early.
Confirmations of accounts receivable: Customers who had not yet been given credit for their discounts can
be expected to take exception to a balance too large.
7.28 The auditors would have known about the normal Friday closing of the books for weekly management
reports, and they could have been alerted to the possibility that the accounting employees overlooked the
once-a-year occurrence of the year end date during the week.

7-6
SOLUTIONS FOR MULTIPLE CHOICE QUESTIONS
7.29 a. Incorrect Allowances can be made for anticipated returns if the earning process is
substantially complete.
b. Correct The earning process is complete at this point.
c. Incorrect Under accrual accounting, the cash does not have to be collected, only
collectible
d. Incorrect This is usually the method for determining “b” but the shipment might be FOB
destination
7.30 a. incorrect This only initiates the earnings process, it doesn’t complete it
b. incorrect This is often the case, but it depends on shipping terms
c. correct This is often the same as the bill of lading date
d. incorrect Under accrual accounting, the company doesn’t have to wait for the check to
record revenue
7.31 a. Incorrect This would not have the outstanding balance; however, there are some times
when the auditor confirms the sale instead of the amount receivable.
b. Correct This would have the balance for confirming
c. Incorrect This would not have the individual customer balance
d. Incorrect This would not have the balance outstanding
7.32 a. Incorrect This is an essential part of the cycle
b. Incorrect This is an essential part of the cycle
c. Incorrect Cash is affected by the collections
d. Correct Even though this involves shipments, it is considered part of the expenditure and
disbursement cycle
7.33 a. Incorrect The sale could occur but not be approved for credit
b. Incorrect The approval has nothing to do with completeness
c. Correct Credit approval helps ensure the sale will be collectible
d. Incorrect Credit approval will not affect when revenue is earned
7.34 a. Incorrect The general ledger bookkeeper doesn’t have access to the customer accounts.
b. Incorrect There’s no advantage to separating access to checks and currency.
c. Correct Nobody in the company has access to cash, therefore it cannot be stolen.
d. Incorrect Normally checks are made payable to company. That doesn’t prevent lapping.
7.35 a. Correct Impropriety of write-offs can be controlled by the review and approval by
someone outside the credit department.
b. Incorrect Even write-offs of old receivables can conceal a cash shortage.
c. Incorrect The cashier could be the cause of the shortage.
d. Incorrect Write-offs should be separated from the sales function.
7.36 a. Incorrect This would increase gross profit.
b. Correct Less sales revenue and correct amount of cost of goods sold results in less gross
profit, therefore the ratio of gross profit to sales will decrease. (Actually, the
gross profit numerator will decrease at a greater rate than the sales denominator
in the ratio, causing the ratio to decrease.)
c. Incorrect This would increase gross profit.
d. Incorrect This would increase sales and cost of sales, and the ratio would not change. If
cost of sales is not recorded, gross profit would increase

7-7
7.37 a. Incorrect This doesn’t verify that the sales invoices represent actual shipments.
b. Incorrect This would require tracing from shipping documents to invoices.
c. Incorrect This would require tracing from invoices to customer accounts.
d. Correct Vouching is used to establish support for recorded amounts.
7.38 a. Incorrect Unrecorded costs would not increase sales.
b. Incorrect Improper credit approvals would not lower COGS. Goods were shipped for
these sales and COGS as a percentage of sales would be unchanged
c. Incorrect Improper sales cut-off would not decrease COGS as a percent of sales.
d. Correct Fictitious sales would increase sales. Since no actual product was shipped,
COGS as a percent of sales would decrease. The most likely debit for fictitious
sales is accounts receivable, causing accounts receivable to increase.
7.39 a. Incorrect Additional inquiries would not provide sufficient corroborating evidence.
b. Correct Reviewing the chances in pricing during the year and ensuring that customers
were charged the new prices provides sufficient, reliable evidence to support the
sales manager’s representation.
c. Incorrect This is an ineffective use of confirmations and requires respondents to identify
unit costs and report information.
d. Incorrect Payments on vendor invoices would not indicate that prices had increased
during the year.
7.40 a. Incorrect When an account is recorded as a receivable it is already recorded as a revenue.
Adding additional revenue would not cover the theft of accounts reeivable
b. Incorrect Receiving money from petty cash would be a poor method to cover the theft of
accounts receivable. The money in petty cash would hav to be accounted for
and is not likely to be sufficient to cover any significant amounts
c. Incorrect Miscellaneous expense would raise suspicion as all miscellaneous accounts are
high risk and subject to review. In addition, accounts receive are usually not
written off against an expense
d. Correct Using the sales returns account would raise the least suspicion because this
account is more commonly linked to accounts receivable. A bookkeeper could
steal money and “write off” to unsuspecting customer’s balance with a fictitious
“sales return.”
7.41 a. Incorrect The payment is probably in transit.
b. Incorrect The shipment is probably in transit.
c. Correct This should have been recorded as a reduction to the receivable by 12/31.
d. Incorrect This occurred after the end of the period.
7.42 a. Incorrect A schedule of purchases and payments would be used to test transactions and
might be performed.
b. Incorrect Negative confirmations would not be an appropriate choice for large account
balances
c. Incorrect The terms on the accounts receivable would not provide information on balance
and transaction amounts
d. Correct The most likely audit step where there are a few large accounts is to send out
positive confirmations.
7.43 a. Incorrect The aged trial balance provides only indirect evidence about controls.
b. Incorrect The aged trial balance provides no evidence about accuracy.
c. Correct The age of accounts is an indication of credit losses.
d. Incorrect The aged trial balance provides no evidence about existence.
7.44 a. Incorrect Lapping pertains to cash receipts, not sales.

7-8
b. Correct False sales journal entries made near the end of the year may have shipping or
other documents that reveal later dates or show lack of sufficient documentation.
c. Incorrect See answer a.
d. Incorrect This step would not detect misappropriation of merchandise.
7.45 a. Incorrect Receiving a confirmation is not proof the customer will pay.
b. Incorrect Confirmation will not detect if the receivables were sold or factored.
c. Correct Accounts receivable confirmation enables recipients to respond that they owe
the company or that they dispute or disagree with the amount the company says
they owe.
d. Incorrect Confirmation provides only indirect evidence that controls are working.
7.46 c. Correct Checking the sequence for missing numbers identifies documents not yet fully
processed in the revenue cycle. It does not provide evidence about accuracy, cut-
off or occurrence.
7.47 a. Correct The accounts receivable debits are supposed to represent sales that have been
ordered by customers and actually shipped to them.
b. Incorrect This is not evidence about existence.
c. Incorrect This provides some evidence about existence, but even if the receivables haven’t
been paid, they may still be valid.
d. Incorrect These file will likely not provide evidence about specific sales.
7.48 a. Incorrect This is an important assertion, but financial statement users are less likely to be
damaged if assets are found that have not been recorded.
b. Correct Financial statement users are more likely to be damaged if assets are found not
to exist.
c. Incorrect Ownership is important, but doesn’t matter if the assets don’t exist.
d. Incorrect Presentation and disclosure assertion is important, but not as important as
existence for asset accounts.
7.49 c. Correct Mainly because the other three choices are listed as appropriate work to do.
Also, customers are likely to ignore negative confirmations after earlier
responding to positive confirmations
.
7.50 a. Correct Negative confirmations are most appropriate when the assessed level of risk is
low, dollar balances on accounts are small, and the auditor believes recipients
will give consideration to the confirmations.
b. Incorrect The auditor assumes customers are likely to respond to errors.
c. Incorrect Because negative confirmations offer higher detection risk, risk of material
misstatement should be low when they are used.
d. Incorrect Because negative confirmations offer higher detection risk, risk of material
misstatement should be low when they are used.
7.51 a. Correct Shipments are traced to customers’ invoices. (This does not imply that the
invoices were recorded in the sales journal.)
b. Incorrect See (a) above. The invoice copies need to be traced to the sales journal and
general ledger to determine whether the shipments were recorded as sales.
c. Incorrect Recorded sales were shipped is not established because the sample selection is
from shipments, not from recorded sales.
d. Incorrect See (c) above.
7.52 a. Incorrect Salespeople could write-off accounts for their friends to keep them from having
to pay
b. Incorrect The credit manager may propose write-offs to reduce days outstanding and
make him/her look better

7-9
c. Correct The Treasurer or another high-ranking manager should approve write-offs.
d. Incorrect The cashier could take receipts and write off the balance.
7.53 a. Incorrect A second request is the first step that should be performed.
b. Correct As the confirmations are a sample of the account balance, even immaterial items
should be followed up as they represent other balances in the universe of
receivables.
c. Incorrect Shipping documents should be examined to test existence of the receivable.
d. Incorrect Client correspondence files may also provide evidence the receivable exists.
7.54 a. Correct Not recording sales on account in the books of original entry is the most
effective way to conceal a subsequent theft of cash receipts. The accounts will
be incomplete but balanced, and procedures applied to the accounting records
will not detect the defalcation.
b. Incorrect The control account wouldn’t match the total of customer accounts.
c. Incorrect Customers would catch the overstatement when examining their statements.
d. Incorrect This is a possibility, but (a) is a better answer. There is less likelihood of getting
caught if the sale is never recorded.
7.55 a. Incorrect The stolen cash wouldn’t be in either of these documents.
b. Incorrect Lapping is not accomplished through write-offs.
c. Correct Lapping is the delayed recording of cash receipts to cover a cash shortage.
Current receipts are posted to the accounts of customers who paid one or two
days previously to avoid complaints (and discovery) when monthly statements
are mailed. The best protection is for the customers to send payments directly to
the company’s depository bank. The next best procedure is to assure that the
accounts receivable clerk has no access to cash received by the mail room. Thus,
the duties of receiving cash and posting the accounts receivable ledger are
segregated.
d. Incorrect See answer (a).
7.56 a. Incorrect A negative confirmation might be used if control risk is low.
b. Correct As detection risk is lower for positive confirmations than negative
confirmations, a positive confirmation is more likely when inherent risk is high.
c. Incorrect Whether the account is due or not usually doesn’t affect the type of
confirmation. However if it is long past due, a positive confirmation is more
appropriate.
d. Incorrect A related party account may be a factor that influences a decision to send a
positive confirmation. The fact that this account was not a related party would
likely lead the auditor to choose a negative confirmation.

7-10
SOLUTIONS FOR EXERCISES, PROBLEMS, AND SIMULATIONS
7.57 Control Objectives and Procedures Associations
a. “Occurrence” Sales recorded, goods not shipped
b. “Completeness” Goods shipped, sales not recorded
c. “Accuracy” Goods shipped to a bad credit risk customer
d. “Accuracy” Sales billed at the wrong price or wrong quantity
e. “Classification” Product line A sales recorded as Product line B
f. “Completeness” Failure to post charges to customers for sales
g. “Cutoff” January sales recorded in December
CONTROL PROCEDURES
1. Sales order approved for credit X
2. Prenumbered shipping doc prepared, sequence checked X X
3. Shipping document quantity compared to sales invoice X X X
4. Prenumbered sales invoices, sequence checked X
5. Sales invoice checked to sales order X
6. Invoiced prices compared to approved price list X
7. General ledger code checked for sales product lines X
8. Sales dollar batch totals compared to sales journal X X X
9. Periodic sales total compared to same period accounts
receivable postings
X
10. Accountants have instructions to date sales on the date of
shipment
X
11. Sales entry date compared to shipping doc date X
12. Accounts receivable subsidiary totaled and reconciled to
accounts receivable control account
X
13. Intercompany accounts reconciled with subsidiary company
records
X
14. Credit files updated for customer payment history X
15. Overdue customer accounts investigated for collection X X X X

7-11
7.57 Control Objectives and Procedures Associations (Continued)
EXHIBIT 7.57-1 Blank form for Students
a. Sales recorded, goods not shipped
b. Goods shipped, sales not recorded
c. Goods shipped to a bad credit risk customer
d. Sales billed at the wrong price or wrong quantity
e. Product line A sales recorded as Product line B
f. Failure to post charges to customers for sales
g. January sales recorded in December
CONTROL PROCEDURES
1. Sales order approved for credit
2. Prenumbered shipping doc prepared. sequence checked
3. Shipping document quantity compared to sales invoice
4. Prenumbered sales invoices, sequence checked
5. Sales invoice checked to sales order
6. Invoiced prices compared to approved price list
7. General ledger code checked for sales product lines
8. Sales dollar batch totals compared to sales journal
9. Periodic sales total compared to same period accounts
receivable postings
10. Accountants have instructions to date sales on the date of
shipment
11. Sales entry date compared to shipping doc date
12. Accounts receivable subsidiary totaled and reconciled to
accounts receivable control account
13. Intercompany accounts reconciled with subsidiary company
records
14. Credit files updated for customer payment history
15. Overdue customer accounts investigated for collection
7.58 Control Assertion Associations
Error Assertions
a) Sales recorded, goods not
shipped
Occurrence
b) Goods shipped, sales not
recorded
Completeness
c) Goods shipped to a bad
credit risk customer
Accuracy
d) Sales billed at the wrong
price or wrong quantity
Accuracy
e) Product A sales recorded as
Product line B
Classification
f) Failure to post charges to
customers for sales
Completeness
g) January sales recorded in
December
Cutoff

7-12
7.59 Client Control Procedures and Audit Tests of Controls
For each client control activity numbered 1-15, write an auditor’s test of control procedure that could
produce evidence on the question of whether the client’s control has been installed and is in operation.
Sales Invoice Sample: Select a sample of random numbers representing recorded sales invoices, and
1(a). Inspect the attached sales order for credit approval signature.
1(b). Trace customer to up-to-date credit file/information underlying the credit approval.
2. Inspect the attached shipping document for (i) existence, and (ii) prenumbering imprint.
3. Compare billed quantity on sales invoice to shipped quantity on shipping document.
4. Find the sales invoice associated with the random number (failure to find this means an invoice
wasn’t recorded). Alternatively, use computer to add up the recorded sales invoice numbers and
compare to a sum of digits check total.
5. Compare sales invoice to sales order for quantity, price, and other terms.
6. Compare prices on sales invoice to approved price list.
7. Check product line code for proper classification compared to products invoices.
11. Compare invoice date to shipping document date.
14. Note whether credit files are updated for customer payment history.
Other
2. Count the number of shipping documents (subtract beginning number from ending number) and
compare to same-period count of sales invoices (to look for different number of documents).
2. Select a sample of random numbers representing shipping documents and look for them in the
shipping document file.
2. Computer-scan the shipping document file for missing numbers in sequence.
2. Use computer to add the shipping document numbers entered in the files and compare to a
computed sum of digits check total.
8. Find client’s sales dollar batch totals, recalculate the total, and compare to sales journal of the
relevant period.
9. Use the same sales dollar batch totals for comparison to separate total of accounts receivable
subsidiary postings, if available.
10. Study the accounting manual and make inquiry about accountants’ instructions to date sales on
date of shipment.
12. Obtain client’s documentation showing A/R subsidiary total reconciled to A/R control account.
Alternatively, add up the subsidiary and compare to the control account.

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13. Obtain client’s documentation showing reconciliation of intercompany receivables and payables
for sales and purchases. Alternatively, confirm balances with subsidiaries or other auditors.
14. Select a sample of credit files and trace to customers’ accounts receivable, noting extent of up-date
for payment history.
15. Study client correspondence on investigation and collection efforts on overdue customer accounts,
noting any dispute conditions. If no effort is made, follow up overdue accounts with audit
procedures (confirmation, determine existence of debtor in directories, etc.)
7.60 Confirmation of Trade Accounts Receivable
a. Auditing standards presume that auditors will request confirmation of the client’s accounts
receivable. An auditor can justify omitting these confirmations if:
1. The accounts receivable are immaterial to the financial statements.
2. The expected response rates to properly designed confirmation requests will be
inadequate, or responses are expected to be unreliable, hence the confirmation procedures
would be ineffective.
3. The evidence expected to be provided by analytical procedures or other substantive
procedures is sufficient to reduce audit risk to an acceptably low level for the applicable
financial statement assertions.
b. These factors will affect the reliability of confirmations:
1. The confirmation form. Some positive forms request agreement or disagreement with
information stated on the form. Other positive forms, known as blank forms, request the
respondent to fill in the balance or furnish other information. Negative forms request a
response only if the recipient disagrees with the information stated on the request.
2. The auditor’s prior experience with this client or similar clients is also likely to affect
reliability because the auditor will have prior knowledge of the expected confirmation
response rates, inaccurate information on prior years’ confirmations, and misstatements
identified during prior audits.
3. The nature of the information being confirmed may affect the competence of the
evidence obtained as well as the response rate. For example, this client’s customers’
accounting systems may permit confirmation of individual transactions, but not account
balances, or vice versa.
4. Sending the confirmation requests to the proper respondents will likely provide
meaningful and competent evidence. Each request should be sent to a person the auditor
believes is knowledgeable about the information to be confirmed.
c. The nature of the alternative procedures the auditor can apply when replies to positive
confirmation requests are not received varies according to the account and assertion in question.
Possible alternative procedures include:
1. Examining subsequent cash receipts and matching such receipts with the actual items
being paid.
2. The auditor can also consider inspecting the client’s customers’ purchase orders on file
and related shipping documents.

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3. Inspecting correspondence between the client and its customers could provide additional
evidence.
4. The auditor may also establish the existence of the client’s customers by reference to
credit sources such as Dun & Bradstreet or other sources of identification (e.g., telephone
book, business directories, state incorporation files).
7.61 Audit Objectives and Procedures for Accounts Receivable
a. Accounts receivable represent all amounts owed to the client company at the balance sheet date.
2. Perform sales cut-off tests to obtain assurance that sales transactions and corresponding
entries for inventories and cost of goods sold are recorded in the same and proper period.
b. The client company has legal right to all accounts receivable at the balance sheet date.
5. (best) Review loan agreements for indications of whether accounts receivable have
been factored or pledged.
4. (possible) Obtain an understanding of the business purpose of transactions that resulted in
accounts receivable balances.
c. Accounts receivable are stated at net realizable value.
3. Review the aged trial balance for significant past due accounts.
d. Accounts receivable are properly described and presented in the financial statements.
6. (best) Review the accounts receivable trial balance for amounts due from officers and
employees.
4. (possible) Obtain an understanding of the business purpose of transactions that resulted in
accounts receivable balances.
7.62 Overstated Sales and Accounts Receivable
AUDIT APPROACH
Objective:
Obtain evidence to determine whether sales were recorded in the proper period and whether gross accounts
receivable represented the amounts due from customers at year end.
Control:
Sales terms should be properly documented. Accounting treatment, including billing at agreed-upon prices,
should follow the terms of the sale. If the risks and rewards of ownership have not been transferred to the
customer, or the price has not been reliably determined, or the collectibility of the amount is seriously in
doubt or not estimable, an accrual sale should not be recognized. Recorded sales should be supported by
customer orders and agreements. Shipping documents should be sufficient to show actual shipment or a
legitimate field warehousing arrangement.
Tests of Controls:

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Questionnaires and inquiries should be used to determine the company’s accounting policies. If the auditors
do not know about “bill and hold” practices, they should learn the details. For detail procedures: Select a
sample of recorded sales, and examine them for any signs of unusual sales terms. Vouch them to customer
orders and other sales agreements, if any. Vouch them to shipping documents, and examine the documents
for external reliability—recognizing blank spaces (carrier name, date) and company representative’s
signature (two places, both company and carrier). Compare prices asked in customers’ orders to prices
charged on invoices. These tests follow the vouching direction—starting with data that represent the final
recorded transactions (sales) and going back to find originating supporting source documents. These
procedures might reveal some transactions of the problem types—bill and hold, and overbilling. The last
month of the fiscal year (although a typical seasonal low month) could be targeted for greater attention
because the sales are much higher than the previous January and because the auditors want to pay attention
to sales cut-off in the last month.
Select a sample of shipping documents, trace them to customer orders, and trace them to invoices and to
recording in the accounts receivable with proper amounts on the proper date. These tests follow the tracing
direction—starting with data that represent the beginning of transactions (orders, shipping) and tracing
them through the company’s accounting process. If extra attention is given in January for cut-off reasons,
this sample might reveal some of the problem transactions.
Audit of Balance:
Confirm a sample of customer accounts. Follow up exceptions noted by customers relating to bill and hold
terms, excessive prices, and double billing. Even a few exceptions raise red flags for the population of
receivables.
Use analytical comparison on comparative month’s sales. Investigate any unusual fluctuations (e.g. January
this year much larger than January last year, the reversal month next year with negative sales). The January
comparative increase in sales should cause auditors to extend detail procedures on some of the month’s
transactions.
DISCOVERY SUMMARY
The auditors performed a detail sales cut-off test on January sales, selecting a sample of recorded sales.
However, they did not notice the significance of “bill and hold” marked on the invoices, and they did not
figure out the meaning of the blank spaces and duplicate company employee signatures on the shipping
documents.
In the following year’s audit, they tested sales transactions in a month when the prior year’s bill and hold
sales were reversed. They noticed the discrepancy but were told that it involved various billing errors. They
did not connect it with reversal of the prior year’s sales.
The auditors confirmed a judgment sample of large accounts receivable balances. Twelve replies were
received on 103 confirmations. Six of the replies were from “bill and hold” customers who listed
discrepancies. The auditors followed up the six by examining sales invoices and shipping documents. They
did not grasp the significance of the “bill and hold” stamps or the features of the shipping documents
described earlier. Three confirmation responses indicated the customers did not owe the amounts. The
auditors relied on Mattel internal documents to decide that the customers were wrong. They did not
examine the sales orders that indicated that these customers had a right of cancellation.
The auditors did not perform month-by-month analytical sales comparisons with the prior year. Thus they
did not recognize the significant fluctuations in the comparative January sales. In the next year’s audit, they
did not recognize the significant comparative decrease in month’s sales for the months when the prior year
bill and hold sales were reversed.

7-16
7.63 CAATs Application—Receivables Confirmation
File Information
Master File—Debtor Name Name of Debtor
Address of Debtor
Master File—Account Detail Customer Account Number
Balance (gross)
Discount Available to Customer
7.64 Audit Simulation: Rock Island Quarry—Evidence Collection in an Online System
This case is a summary of an actual situation and should be used to generate discussion of how auditors
must adapt to a changing environment. The solution suggested here represents the preliminary response by
the audit firm involved. You and your students will likely generate additional responses.
a. 1. Program change controls—The primary concern is the security of the programs that
process the quarry transactions at the quarry’s computers and at the home office.
Assuming the auditors can test and evaluate these programs, the concern is how changes
are made in a controlled, authorized fashion. The auditors need assurance that the same
programs are used by all locations throughout the period.
2. Access controls—Who is authorized to operate the quarry computers and how are
unauthorized personnel prevented from operations? Although not mentioned in the case,
access should be controlled through the use of a weigh master’s identification number
and password (changed periodically). Physical access should also be evaluated. Are the
computers kept in a locked, secure area?
3. Sales transaction program controls—The system described is not unlike any on-line sales
order entry system. Certain edit or validation controls should be incorporated such as: (a)
limit tests (for impossible weights and out-of-range numbers for rock grade), (b) missing
data tests (all fields have data), (c) valid character and sign tests (appropriate fields
numeric and positive) and (d) sequence tests (transaction numbers in sequence, by
quarry).
4. Completeness controls—The system has to contain controls that ensure all transactions
sent by the quarries are received at the home office. These can be as simple as a signal
sent back to the quarry microcomputer that the sale was received and as complex as the
microcomputer accumulating control totals that are matched to home office control totals
at the end of the day. In such distributed systems, the computers would most likely store
all transactions (keep an onsite log) until receipt is confirmed. A transaction numbering
scheme can also ensure that no transactions were missed.
b. The implication of the programs residing in the computers at the quarries is that programs may be
changed there as well as from the home office. Therefore, the change controls mentioned above
are important, as well as how program modifications are made to the quarry computers.
Obviously, several sites will have to be visited.

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c. Auditors debate whether “documentary evidence” includes evidence in computer-readable form.
The authors believe such evidence should be considered documentary evidence. The problem then
becomes one of whether this computer-readable evidence will be available during the period under
audit. In all probability, a log of all incoming transactions is captured at the home office so that a
complete audit trail exists. The auditors need to request these logs be retained. If the logs are
available, generalized audit software can be used to select samples to be printed.
If the logs are not retained, sampling will have to be done during transaction occurrence rather
than after the fact. This would involve selected testing throughout the audit period. The system
described would also be appropriate for CAATs
A final point to have the class discuss is what is likely to happen when one of the computers goes
down at one of the quarries or the entire network is down. Rock Island will have to provide
manual backup procedures and such procedures are normally not well controlled and thus become
subject to errors and frauds.
7.65 Organizing a Risk Analysis
TO: Senior Internal Auditor
FROM: Director of Internal Auditing
DATE: November 31, 20XX
SUBJECT: Risk analysis of accounts receivable accounting
These questions are for your guidance.
The Problem
Total patient accounts receivable have increased steadily and rapidly for eight months. Our last audit of this
area was 10 months ago. A favorable report is in the working paper file. I can see no apparent reason for
the increase because the number of beds, the occupancy rate, the billing rates and the insurance contracts
have not changed.
What Financial/Economic Events Have Occurred in the Last 10 Months?
1. Are a greater number of patients uninsured?
2. Is a larger number or greater dollar amount overdue?
3. Have any accounts been written off in the last 10 months? Number? Dollar amount?
4. Which accounts are presently considered doubtful of collection? Why?
5. Have patients complained about their bills?
Who Does the Accounting?
1. Are new people doing the accounting?
2. Who is the accounting manager now?
3. Did resigned employees give reasons?
What Data Processing Procedures and Policies Are in Effect?
1a. What are the current procedures for billing patients?
1b. What changes have been made in the last 10 months?
2a. What are the current procedures for recording changes and collections?
2b. What changes have been effected in the last 10 months.
3a. What are the credit and collection policies?
3b. Are they being followed?
3c. What changes have been effected in the last 10 months?

7-18
How is the Accounts Receivable Accounting Done?
1. Has the accounting been put on computer within the last 10 months?
2. How many employees handle the accounting?
Computer ______________________
Noncomputer ___________________
7.66 Study and Evaluation of Management Control
TO: Internal Audit Staff
FROM: Senior Internal Auditor
DATE: July
SUBJECT: Comparison standards for study and evaluation of management risk mitigation
control policies
To audit the performance of management controls, you will need to know quantitative standards of
acceptable performance. Standards for two policies are described in this memo.
I. Sales are billed to customers accurately and promptly.
A. Accuracy
Policy Standard: No more than three percent of the sales invoices are figured with errors
of either quantity or unit price or extension error amounting to over $1
per invoice.
Audit Procedures:
1. Audit for accuracy by selecting a sample of recorded sales invoices and (a)
vouch the customer name to supporting purchase orders and shipping
documents, (b) vouch the quantity shipped to supporting shipping documents,
(c) trace the unit price to the approved price list, and (d) recalculate the
extensions, including shipping charges and sales tax. Document all errors over
$1 per invoice.
2. Audit for completeness by selecting a sample of shipping documents and tracing
to recorded sales invoices.
3. Audit for accuracy (related to shipping quantities, primarily) by confirming a
sample of customers’ balances (or individual unpaid invoices) and look for
customer disagreements.
B. Promptness
Policy Standard: Sales invoices are to be entered in the sales journal and in customers’
accounts with a (mailing) date no later than one day after shipment.
Audit procedure:
Using the samples in procedures #1 and #2 above, compare the sales journal record date
and the date shown in customers’ accounts with the shipment date. Document the number
and extent of time lags exceeding one day. Inquire about the mailing date.

7-19
II. Accounts receivable are aged and followed up to ensure prompt collection.
A. Accounts Receivable Aging
Policy Standard: A complete and accurate aged trial balance is prepared monthly
showing receivables in categories (a) Current, (b) 31-59 days overdue,
(c) 60-89 days overdue and (d) more than 90 days overdue.
Audit Procedures:
1. Inspect the aged trial balances to determine whether they were actually prepared
each month.
2. Audit for completeness by comparing the trial balance total to the general ledger
control account. (Foot each, if necessary.)
3. Audit for accuracy by selecting a sample of customer accounts and tracing aged
data from the customers’ ledger accounts to the aged trial balance. This is the
important direction for the procedures because incorrect “underaging” thwarts
the collection effort. (Selecting a sample of noncurrent aging data from the trial
balance will not enable you to detect noncurrent amounts incorrectly aged as
current.)
B. Follow-up For Prompt Collection
Policy Standard: Credit department personnel are supposed to receive the trial balance
within five days after each month-end, and send different letters within
five business days of receiving the aged trial balance for accounts as
they become longer overdue, and turn accounts over to an outside
collection agency when they are over 90 days past due. After 60 days,
further credit is cut-off and customers are put on a cash basis.
Audit Procedure:
1. Inspect the aged trial balances for indication of preparation date or a “date
received” stamp by the credit department to determine promptness of transmittal
within five days after each month-end.
2. For a sample of past due amounts in different months, inspect copies of the
letters sent to customers and (a) observe whether the right standard letter was
sent and (b) the date. Document exceptions to type of letter and mailing delay.
3. Inspect correspondence relevant to determining date that over-90 day accounts
were turned over to an outside agent.
4. Inspect notices of credit cut-off for customers with over-60 day balances and
inspect the trial balance for evidence of new credit mistakenly extended to such
customers.
5. Using the sample of #2, verify the accuracy of the subsequent collections report
prepared by the credit department by vouching the data therein to cash receipts
records.

7-20
7.67 Audit Simulation: Cash Receipts and Billing Control
Dealing with these weaknesses gives students an opportunity to think about fraud possibilities that could
occur with and without collusion among these four employees. A useful discussion of intentional frauds
can be built around the weaknesses and possibilities shown below in the AICPA CPA Examination answer
to this problem.
CREDIT MANAGER
• approves credit without reference to rating agencies (e.g. Dun & Bradstreet)
• approves credit without using any established credit limits or policy
• nobody supervises the credit-granting function and nobody reviews the results of the credit
manager’s credit decisions
ACCOUNTS RECEIVABLE SUPERVISOR
• Can alter the details of customer charges (authorize-initiate transactions) and prepare invoices and
records based on the alterations (a form of recordkeeping in this system)
• Does not use a control total (e.g., daily batch financial total) of the charge forms in comparison to
the total on the invoices and nobody else knows whether the totals agree
• Does not reconcile the accounts receivable subsidiary ledger with the control account balance
(therefore can “write-off” accounts for friends because nobody reconciles the totals and nobody
compares the actual write-offs to the bookkeeper’s authorizations) (also the A/R supervisor can
simply not put a contractor’s balance on the report of overdue balances and therefore permit the
contractor to obtain additional credit past the standard six-month period)
CASHIER
• Has custody of cash and controls the recordkeeping (the latter by sending the bookkeeper the only
documents—the remittance advices and daily cash register summary— available for recording the
cash receipts)
• Can alter or delay the bookkeeper’s cash information because no one else has the verified deposit
slip or the list of checks for comparison
• Performs the bank reconciliation, which is not compatible with the cash custody and
recordkeeping duties (can alter the reconciliation to cover up cash shortages)
BOOKKEEPER
• Authorizes account write-offs according to a fixed policy (six-month nonpayment period) without
reference to knowledge of reasons or details (and apparently without further correspondence with
the contractor)
• The six month grace period is too long, and credit may be granted for awhile when it is not
justified
• Can control the credit-refusal process by not notifying the credit manager of the overdue accounts
• Can authorize and actually write off accounts without supervision (has the incompatible duties of
authorization-initiation of write-off orders and actually making entries in the records)

7-21
7.68 Test of Controls and Errors/Frauds
1. Controlled access to blank sales invoices.
a. Observation. Visit the storage location yourself and see if unauthorized persons could
obtain blank sales invoices.
Pick some up yourself to see what happens.
b. Someone could pick up a blank and make out a fictitious sale. However, getting it
recorded would be difficult because of the other controls such as matching with a copy
from the shipping department. (Thus a control access deficiency may be compensated by
other control procedures.)
2. Sales invoices check for accuracy.
a. Vouching and Recalculation. Select a sample of recorded sales invoices and vouch
quantities thereon to bills of lading, vouch prices to price lists, and recalculate the math.
b. Errors on the invoice could cause lost billings and lost revenue or overcharges to
customers which are not collectible (thus overstating sales and accounts receivable).
3. Duties of accounts receivable bookkeeper.
a. Observation and Inquiry. Look to see who is performing bookkeeping and cash functions.
Determine who is assigned to each function by reading organization charts. Ask other
employees.
b. The bookkeeper might be able to embezzle cash and manipulate the accounting records to
give the customer credit and hide the theft. (Debit a customer’s payment to Returns and
Allowances instead of to cash, or just charge the control total improperly.)
4. Customer accounts regularly balanced with the control account.
a. Recalculation. Review the client’s working paper showing the balancing/reconciliation.
Do the balancing yourself.
b. Accounting entries could be made inaccurately or incompletely and the control account
may be overstated or understated.
7.69 Instructor’s note: The answers to this case are numerous and the case is meant to initiate a discussion as to the
subtleties of auditing revenue and the nature of the auditor’s responsibilities.
A. Several fraud issues have arisen because the auditor looked only at the numbers, but did not look at how the
numbers were generated. In many of these instances sales were fictitious or inflated. While this case does
not involve such blatant financial statement fraud, “bait and switch” is considered fraud. In attempting to
manage the audit risk, it is clear that auditors must look at business practices and determine that the client is
generating review legally. However audit standards are clear that determining whether an act is illegal is
beyond an auditor’s competence (SAS 54)
B. If it is likely that the revenue is uncertain in its amount there should be an adjustment to reduce revenue by
the amount deemed uncertain. The footnote for revenue should disclose the reason for the adjustment.
C. If the financial statements were issued during the investigations and a loss appeared to be reasonably
possible, the auditor should ask for a footnote disclosure (FASB 5).

7-22
Follow-up note: Subsequent to the above article and the imitation of the investigations, Ticketmaster refunded a
substantial part of the revenue to customers that had purchased tickets on TicketsNow.
7.70 Kaplan CPA Simulation: Internal Control Questionnaire
Sales and Accounts Receivable Internal Control Questionnaire Responses
Strength Southland deposits its cash receipts on a daily basis.
The daily deposit of cash is an important control relating to the revenue and
collection cycle.
Strength Access to the price master file is restricted to authorized personnel only.
Proper authorization and access to the price list reduces the occurrence of
fraudulent or inaccurate sales transactions (reduces “revenue leakage”).
Weakness The accounts receivable manager approves the write-offs of uncollectible
receivables.
The approval of accounts receivable write-offs should be performed by an
individual independent of the sales and account receivable system, such as
the controller.
Neither Southland’s president is the primary check signer and is also responsible for
mailing the checks.
The president signing and maintaining responsibility for mailing the checks is
a control over the cash disbursements system, not the sales and accounts
receivable system.
Weakness The warehouse manager matches the pre-numbered shipping documents with
entries in the sales journal.
While the matching of the shipping documents to the sales journal entries
should provide assurance that all shipped items have been recorded as sales,
the warehouse manager is not the appropriate person to perform the function
since he is not independent of the shipping activity. This represents improper
segregation of duties.
Neither The voucher register is reconciled to the control accounts by an independent
individual on a monthly basis.
A voucher register relates to the cash disbursement/accounts payable system,
not the sales and accounts receivable system.
Strength Customer orders are agreed to an approved customer list.
The comparison of customer orders with the approved customer list will
provide assurance that credit sales are made only to customers that have been
granted credit (increases likelihood of ultimate collectability).
Strength Total amounts recorded in the accounts receivable ledger from remittance
advices are compared to the appropriate bank deposit slip.
Comparing the amounts recorded in the accounts receivable ledger to the
bank deposit should reveal incorrect postings to accounts receivable since any
differences would likely be investigated.
Weakness Disagreements with customers generated by the monthly statements that are
sent by the client are resolved by the sales manager.
The sales manager should not be responsible for resolving billing
disagreements with customers because he is not independent from the sales
and accounts receivable process.

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7.71 Kaplan CPA Simulation: Confirmation Form
a. Most receivables are collected by Norman, Inc. within 30 days of
billing.
Negative
The number of days sales in accounts receivable has gone up by a
relatively large amount since last year because the sales figure
has grown.
Positive
The CPA firm’s assessment of inherent risk in the area of
accounts receivable was higher than had been anticipated.
Positive
The CPA firm is particularly concerned about obtaining sufficient
evidence in connection with the existence assertion for the
company’s receivables.
Positive
The CPA firm’s assessment of control risk in the area of accounts
receivable was lower than had been anticipated.
Negative
The company had only a few receivables but most have relatively
high balances.
Positive
Analytical procedures were performed early in the audit and the
accounts receivable balance was determined to be within the
auditor’s anticipated range.
Negative
b. Confirmation of accounts receivable is normally performed in all audit engagements to help gain
sufficient evidence about these balances, especially in connection with the existence assertion.
However, in very specific circumstances, omission of the confirmation can be justified. The most
normal situation would be where such accounts are immaterial. If credit sales are only a minor
part of the organization’s revenues, the accounts receivable total may not be large enough to
warrant the time and effort of confirmation.
In addition, in some cases, the reliability of such confirmations is not strong enough to require the
effort. If the firm will have difficulty getting the confirmation to a customer official who has
knowledge of the balance or who will spend the time to determine the correct balance, little is
gained by confirmation. For example, confirmations sent to the United States government usually
provide no corroborating evidence and, therefore, should not be relied on in an audit.
Finally, if the assessment of the client company’s inherent risk and control risk is especially low,
the firm may be able to obtain sufficient audit evidence in order to provide by other means.

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7.72 Kaplan CPA Simulation: Alternative Procedures
a. Option Procedure
Do Not
Perform
Compare the percentage of accounts receivable to sales for the audit period to prior
years. Obtain an understanding of unusual or unexpected variances.
Comparing the percentage of accounts receivable to sales is merely an analytical
review procedure. Since analytical review procedures only provide circumstantial
evidence, they are more appropriate for supporting assertions in which potential
misstatements are not apparent from examining detailed evidence or when detailed
evidence is not available. When testing accounts receivable for the existence
assertion, detailed evidence (such as subsequent payments from customers) should be
obtained to ensure a higher level of assurance.
Perform For the non-replying customers, search the accounts receivable detailed listing for
cash receipts received after the confirmation date. Trace the cash receipt to
supporting documentation to determine if payment applies to the account receivable
balance as of the confirmation date.
Alternative procedures generally include reviewing subsequent cash collections and
tracing them to a particular item on the accounts receivable listing to provide
evidence that the specific account receivable does exist.
Do Not
Perform
Review the aged trial balance for material past due accounts.
Reviewing the aged trial balance will not provide evidence of the existence assertion.
It will, however, provide evidence with respect to the net realizable value (valuation
assertion) since it relates to the collectability of accounts receivable.
Perform Review the allowance for doubtful accounts activity subsequent to year end to
determine whether the unconfirmed accounts receivable were subsequently written
off.
Identifying accounts receivable balances that were subsequently written off after the
confirmation date could reveal that the unconfirmed account receivable did actually
exist at the confirmation date. Additionally, because of the subsequent write-off, it is
possible that there may have been a valuation impairment of that receivable at the
confirmation date. However, to test the valuation assertion would require a different
set of procedures and would not provide further evidence to support existence.
Do Not
Perform
Review the aged trial balance for material past due accounts.
Reviewing the aged trial balance will not provide evidence of the existence assertion.
It will, however, provide evidence with respect to the net realizable value (valuation
assertion) since it relates to the collectability of accounts receivable.
Do Not
Perform
Perform test of controls for the sales/accounts receivable/cash receipts system to
confirm the effectiveness of the accounting system.
Test of controls do not provide direct evidence of the existence assertion. They are
performed to determine whether reliance may be placed on a particular control and
relate to the internal control assessment prior to beginning field work.

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b. Option Procedure
True The evidence gathered via the standard audit procedures for accounts receivable will
support that Amberly’s sales returns are properly valued.
Evidence supporting the valuation of sales returns will be gained via the audit
procedures for accounts receivable. Specifically, audit procedures for the allowance
for doubtful accounts should reveal any material misstatements of sales and/or sales
returns.
False Vouching expenses, performed as part of the search for unrecorded liabilities, should
uncover any material misclassifications of expenses that occurred during the year.
Vouching expenses performed as part of the search for unrecorded liabilities will
only uncover any material misclassifications of expenses that occurred during the
year and were paid subsequent to year end. To gain assurance that expenses were not
misclassified for the entire year, the auditor must vouch a sample of expenses based
on materiality levels.
True An unexplained increase in the gross profit ratio may suggest the presence of
unrecorded expenses.
An unexplained increase in the gross profit ratio may suggest the presence of
unrecorded expenses in COGS since unrecorded expenses would understate total
expenses and falsely increase the profitability ratios (i.e., net income).
False Amberly’s bill and hold transactions may increase audit risk because the sales may
be understated at the end of the year.
Amberly’s bill and hold transactions may increase audit risk because such
transactions may result in sales being overstated at year end. Bill and hold
transactions usually involve selling products for large discounts to retailers and
holding them (perhaps in third-party warehouses) to be delivered at a later date.
Clearly the risk is of prematurely recorded or uncollectible sales.
c. To: Controller, Amberly
From: Partner, Rapport
Negative confirmations solicit a response from the customer only if the reported balance is
incorrect. While it is a less-costly approach because second and third confirmation requests are
not sent out, it provides lower quality of evidence since an explicit corroboration of existence is
not received. Negative confirmations are typically used for small balances that are not old and
when both the inherent risk and control risk are assessed as low.
Positive confirmations request the customer to verify whether a particular accounts receivable
balance is correct. Since an explicit response is received in all cases, positive confirmations are
viewed as a better technique. Positive confirmations are generally used for large balances, old
balances, or where the risk of error is high.
We have chosen to use positive confirmations to prove the existence of your accounts receivable
since the individual balances are large and are generally older.

7-26
7.73 Kaplan CPA Simulation: Timing of Confirmations
To: The Audit Team of Western
From: In-Charge Auditor, Ridge
Accounts receivable are usually confirmed early in audit as part of interim procedures unless inherent
and/or control risks are high. In such a case, confirmation is carried out closer to year- end instead. This is
Ridge’s first audit of Western and there are a large number of account receivable accounts, therefore,
inherent risk is assessed as high. The clerk is responsible for virtually all aspects of the accounts
receivable/cash receipts cycle, thus control risk is also assessed as high. Due to the overall audit risk
assessment as high, it is more appropriate for Ridge to confirm accounts receivable balances at year-end.
7.74 Kaplan CPA Simulations: Audit Evidence and the Confirmation Process
a.
Corroborating evidence includes the books of original entry, general and
subsidiary ledgers and accounting manuals.
AU 326 distinguishes between underlying accounting data and all corroborating
(supporting) information available to the auditor. Books of original entry, general
and subsidiary ledgers and accounting manuals are all examples of underlying
accounting data.
False
All other things being equal, as the acceptable level of detection risk increases, an
auditor will have to increase the extent of substantive tests by increasing the
sample sizes used for testing.
When the acceptable level of detection risk increases, it means that the auditor is
more willing to accept the risk that the audit procedures will lead to an improper
conclusion that no material misstatement exists when in fact it does exist. This
means that less substantive testing is required and thus, the sample sizes will
generally be decreased.
False
Often an auditor must settle for relying on persuasive rather than convincing
evidence for individual financial statement assertions.
AU 326 requires the auditor to use professional judgment to obtain sufficient
competent evidential matter to form an opinion on the financial statements. Due to
time and cost limitations imposed on the auditor, it often means that gathering
persuasive evidence (still reliable but somewhat less reliable than convincing
evidence) will have to suffice.
True
It is possible to completely avoid the confirmation process if inherent and control
risks are assessed as low.
The statement is true. For example, when inherent and control risks are low for
cash, the auditor might inspect client-provided bank statements rather than
directly confirming cash balances with the bank
True

7-27
The auditor should use the positive form of confirmation request when there are a
large number of small balances involved.
The auditor should use the negative form of confirmation request when there are a
large number of small balances involved. The negative form requests the recipient
to respond only if s/he disagrees with the information stated on the requested.
Therefore, the willingness for an auditor to accept a “no response” as confirmation
of a large balance is not prudent in terms of managing audit risk. Use of the
positive form of confirmation should occur when there are large balances
involved; the respondent should be asked to fill in the amount(s) owing.
False
In order to increase audit efficiency, the auditor should delegate some of the
control over the confirmation requests and the responses to the internal audit
department of the firm being audited.
Per AU 330, the auditor should maintain control over the confirmation requests
and the responses at all times. In order to maintain proper
independence/objectivity over the confirmation process, none of the related
auditor’s duties should be delegated to the company’s internal audit department.
False
b. To: Vincent Lau, CPA
From: Chung, CPA
Bill and hold transactions and Channel stuffing (trade loading)
Bill and hold transactions are those which a customer agrees to purchase goods but the seller
retains physical possession until the customer requests shipment to designated locations. Because
delivery has not yet occurred, such transactions do not ordinarily qualify for revenue recognition.
However, the seller may artificially inflate revenues by recording the sale and then physically
storing the inventory in an alternate location (unknown to the auditor) until the customer requests
shipment.
Channel stuffing (trade loading) is a marketing practice that suppliers sometimes use to boost sales
by inducing distributors to buy substantially more inventory than they can promptly resell. This
may artificially inflate revenues in the current period as future revenues may be lower than normal
as the distributors will not need to buy…Or it could result in more sales returns.
Related Parties
Transactions should reflect their substance (rather than merely their legal form).
Important audit procedures to detect related-party transactions include:
1. Ask client directly for the names of related parties,
2. Review Board of Directors’ minutes
3. Review SEC filings and financial statement footnotes,
4. Review the nature of transactions with major customers and suppliers,
5. Review accounting records for large and/or nonrecurring transactions,
6. Review confirmations of loans receivable and payable for guarantees.

7-28
7.75 Mini-Case: Confirmations
NOTE TO INSTRUCTOR: For this assignment, question 2 from this Mini-Case is applicable.
2. When receiving a questionable piece of evidence, the auditor should follow up immediately to
corroborate the evidence. In this case, the auditors should have followed up immediately by
telephone using a phone number obtained from a nonclient source (e.g., an international telephone
book or Internet Web site). The audit team should also have requested that, in addition to the
faxed copy, the original confirmation be mailed directly to them. In terms of evidence, a signed
original is preferable to a faxed confirmation for billions of dollars.

Exploring the Variety of Random
Documents with Different Content

‘Dan’l’s got th’ sun in ’s eyes,’ said old Dray anxiously, as he
watched. ‘’A never can bide that top wicket! Steady now, Dannie,
an’ keep a straight bat!’
He roared out the last words. And then, in a moment, we were all
on our feet in consternation. The ball had never left the bowler’s
hand—that much we were sure of. Daniel stood at his wicket safe
and sound, but Tom Clemmer was coming back to the tent, followed
by a derisive chorus from the whole field.
‘Hout, Tom? Never hout!’
‘What i’ th’ wureld houted ye, lad?’
‘Hout! Never!—’tis a swindle, Tom!’
Amidst the eager exclamations of his friends, Tom Clemmer strode
into the tent, and began slowly to unbuckle his pads. All the time he
stared fixedly into space.
‘I could ha’ hup wi’ my fist,’ he said, after a moment’s wrathful
silence, addressing no one in particular, ’an’ I could ha’ gi’en that
there grocer-chap sech a— But there! ’tis no sense yammerin’!
Doan’t ye run out, sir, or ’a ’ll ha’ ye, same as ’a had me!’
He spoke now to the curate, who was preparing to go to the wicket,
and the truth dawned upon us at last. The bowler had played Tom a
very ancient and very mean-spirited trick. Old Clemmer, regardless
of the agony it caused him, stamped his swaddled foot upon the
ground.
‘An’ to think, Tom!’ he groaned, ‘as ye lit up th’ forge-fire special for
’un only laast Sunday, ’cause his ould mare—’
But we had no thought for anything but the disaster that had
befallen us, and all that was now imminent. With Tom Clemmer, the
one hope of Windlecombe, out of the fight, what might happen to
the rest? With bated breath we watched for the third ball. Young
Daniel drove it over the bowler’s head, and with a trembling pencil I

put down two to his name. Playing with desperate care, he added
two more before the end of the over, and we began to pluck up
heart again. Young Tom came and stood behind me. His big thumb
travelled down the list of names on the scoring-book.
‘’Tis not lost yet!’ he said with reviving cheerfulness. ‘Dan’l may do
well, wanst ’a gets set. An’ belike Mr. Weaverly ’ull bide out a bit.
Then there be Huggins wi’ his luck; an’ who knaws but what the
boys ’ull account fer a dozen or so atween ’em?’
I had now time, as the fielders were accommodating themselves to
the left-handed batting of the curate, to glance down the list. The
last name came upon me as an utter surprise.
‘What? Never old Stallwood! Why, he must be seventy, if he’s a—’
‘Ay! Cap’n Stall’ard sure enow! ’Tis a joke, more ’n anything. But
ne’er another livin’ sowl there wur, as cud— Oh, Jupitty! Mr.
Weaverly’s hout leg-afore!’
But it was not Mr. Weaverly’s leg. With a white face, his body bent
to the shape of an inverted letter L, and both arms clasped about his
middle, the curate came tip-toeing back to the tent. He sat down
silently in a corner. Huggins—a lean, red-whiskered giant in
moleskins—burst out into the sunshine and made for the wicket,
waving his bat like a war-club and murmuring imprecations as he
went.
‘Now ’tis jest touch-an’-go,’ said young Tom in my ear. ‘If ’a hits ’em,
they’ll travel, you mark me! ’Twill be eether th’ river, th’ town, or
Windle Hill.’
Huggins stood at the wicket, legs wide apart, and bat held high over
his head. The bowling now was swift, stealthy, underhand. The ball
sped down the pitch, never leaving the grass for an inch. A crack
rang out in the dazzling July sunshine. Daniel Dray started to run,
but the batsman waved him back. Huggins stood watching the skied

ball until it came to ground in the next field. He laughed
uproariously.
‘What d’ye think o’ ee?’
It was another four, and that made eleven in all. Huggins swung up
his bat, and spread his great hob-nailed boots for a still mightier
effort. The ball hissed down the pitch. Huggins caught it as it
hopped from a tussock. Like a lark it soared up into the blue, and
we heard a clear musical plunk as it dropped into the river. A roar of
delight burst from the crowd.
‘Lost ball!’ shouted Tom behind me. ‘Hooroar! Seventeen!’
Huggins spat upon his hands, took a reef in his leather belt, and
lifted his bat again. The little underhand bowler came crouching up
to the crease, and launched the new ball almost from his knees.
Wide and wild it flew this time. But there was a sound of crashing
timber; Huggins’s wicket scattered into space, stumps and bails
whirling together half-way up the pitch. He had hit the wrong thing.
‘An’ now,’ wailed poor Tom Clemmer, ‘’tis as good as finished. Dan’l
wunt ha’ no chaance. Jest as well declare, an’ ha’ done wi’ it. Th’
boys?—they’ll be all done in a hover, an’—’
‘Well, an’ what about th’ Cap’n, Tom?’
It was the voice of the Captain himself, and we all turned to look.
He was leaning comfortably against the tent pole, the very picture of
an old, superannuated forecastle-hand. He wore his usual vast
faded blue suit. A seaman’s cap with hard shiny peak gripped his
bald head from the rear. His red face swam in joviality and
perspiration. Tom regarded him with mingled respect and doubt.
‘Ye caan’t run, Maast’ Stall’ard.’
‘Trew, Tom!’
‘An’ ye ha’ant touched a crickut bat fer thirty year.’

‘Trew agen,’ returned the Captain serenely.
‘Ha, hum! well! a good plucked-un ye be, anyways. Now then,
Dickie!’
The first small boy set forth over the sunny stretch of grass that lay
between the tent and the waiting team. Very small and insignificant
he looked in his school-corduroys, and leg-pads that reached well-
nigh up to his waist. His advent was greeted with ribaldry from all
parts of the field. We heard Daniel Dray admonishing the boy as he
came smiling up to the pitch.
‘Now, Dickie, doan’t ye dare run ’til I shouts to ye, an’ then run as if
He wur after ye. Hould your bat straight, ye young varmint! Now
then, look hout! There! what did I tell ye?’
Dickie’s wicket was down, and Dickie himself was running back to
the tent vastly relieved.
‘Out wi’ ye, Georgie Huggins! An’ do as well as your faather!’ cried
Tom Clemmer encouragingly. ‘’Tis hover, an’ Dan’l’s got th’ play
now. Oh, Dan’l, Dan’l! if only ’twur you an’ me!’
But, playing with the ingenuity as well as the courage of despair,
young Daniel Dray now began to show his true mettle. Odd runs he
refused, taking only even numbers, so that each time the bowling
fell to his lot again. At the end of the over, he stole a desperate
single with the same object in view. He reached home safe enough,
but Georgie was run out. Boy Number Two had been disposed of at
the cost of a gallant six.
Following the same tactics, young Daniel eked out the remaining
three boys with still more crafty skill. When at length old Stallwood,
the last man, launched out into the sunlight to show the town what
he remembered of cricket, the score had risen to forty-nine, and our
spirits with it. We cheered him lustily as he went.
‘Wan more,’ quoth Tom Clemmer, ‘jest wan, an’ I’ll light me pipe.
There be allers a chaance wi’ fifty. Lorsh! Look at th’ Cap’n!’

Three times on his way to the pitch he had stopped, turned, and
waved his cap in acknowledgment of the ovation given him. And
now he was greeting the Stavishamites each by name, and shaking
hands with the wicket-keeper. He got to the crease at last and
grounded his bat. The next moment the whole field had left their
places and run for the tent, leaving the Captain standing alone and
amazed at his wicket.
‘’A doan’t knaw ’a be hout,’ said Tom. ‘D’ ye onnerstand? ’A never
heerd th’ bawler shout, an’ never seed th’ ball acomin’. Belike ’a
thinks they be all gone fer a drink, to hearten ’em at the sight o’
sech a crickutter!’
And being free for a time, I took upon myself the task of walking out
to the Captain, and breaking the news to him as gently as I could.
It was now Windlecombe’s turn to take the field, and Tom Clemmer
led out his team with a good heart, in spite of its tail of juveniles.
Daniel Dray and the Rev. Mr. Weaverly were our first, indeed our
only bowlers. One of the first batsmen for Stavisham was Daniel’s
ancient foe, the grocer; and we watched the beginning of play with
breathless interest, for we knew Daniel would aim to kill. He
grubbed savagely in the sawdust, then sent the first ball hurtling
down the pitch.
The old men were still upon the benches outside, and in that quarter
sympathy with Windlecombe was as staunch as ever. But in the
scoring tent I sat amidst enemies now. The townsmen crowded
behind me, a humorously sarcastic crew.
‘Fifty to beat? My ould Aunt Mary! D’ ye reckon we’ll do it, Bill?’
‘Dunno. ’Tis ser’ous fer Stavisham. Only eleven on us, there be.
Likely March wunt do ’t off his own bat—no, not ’arf!’
‘That there tinker-cove’s agoin’ to bowl fust. There ’ee goos! Wot a
—’

The rest was drowned in a thunderclap of shouting. There was a
general stampede among the spectators. For the grocer had driven
Daniel’s first ball clean into the tent.
It was a bad beginning for Windlecombe, and bad rapidly changed
to worse. Young Daniel bowled steadily and coolly for the first over,
in spite of continuous punishment; but thereafter he lost first his
temper, and then his head. The smiling grocer played him to all
points of the compass; and the more the grocer smiled, the more
wildly erratic Daniel’s bowling grew. As for the Rev. Mr. Weaverly, he
could do no more than send meek, ingenuous balls trundling
diffidently up the pitch; and he was skied with heartrending
regularity. The batsmen kept continually running. The little tent
seemed to belly out on all sides with the cheering, as a sail with
wind.
‘Thirty up!’
‘Thirty fer nauthin’!’
‘Thirty-one! And another’! Thirty-two! Garn, March! Wot a
wazegoose! Thirty—’
‘Five! ’Ooray!’
The shout went off in my ear like a punt gun. And then there fell a
sudden silence about me, as all strained eyes and ears out to the
field. Some altercation was going on, but not between members of
the opposing sides. ‘Drop ut, ye ould fule!’ I heard Tom Clemmer
roar; and, peering over the crowd, I saw Captain Stallwood, ball in
hand, walking up to the pitch. He rolled up his sleeves as he came.
‘Drop ut, I tell ye!’ cried Tom once more, ‘’tis crickut we be playin’,
not maarbles, man! Gimme that ball, Stall’ard, or I’ll— Lorsh! what
be come to th’ ould—’
The rest was a confused wrangle amongst the whole team.
Presently, to our amazement, we saw all drift back to their posts,
and old Stallwood take his place triumphantly at the bowling-crease.

In the dead quiet that followed, I heard the grocer chuckle richly, as
he got ready to smite the Captain all over the field.
The old man stood stock still on the crease, eyeing the batsman
solemnly, the ball held low down between his knees. So long he
remained in this posture, that at length impatient exclamations
began to break out on all sides.
‘Well! now ye ha’ got un, Stall’ard, let ’n goo, mate!’
‘’Tain’t i’ church ye be, Cap’n. ’Tis crickut!’
‘Bawl up, gaffer! We warnts to get hoame afore daark!’
And from the grocer, leaning with exaggerated weariness on his bat:
‘Doan’t ye be i’ no sorter hurry, ould bluebottle! But when y’ are
ready, just send us a postcard, will ye?’
The Captain’s hand went slowly up, the ball held curiously against
his wrist. He launched it with a sudden sidelong twist. As it rose
high into the air, I could see that it went wide and off, even from my
position in the tent. With a laugh the batsman strode out half a
dozen yards to meet it. A moment later he was gazing back aghast
at his splayed wicket. The Captain’s rich husky voice pealed out
above the din:
‘There be a poun’ o’ butter fer ’ee!’
And now we were the frantic spectators of a drama that gained in
thrilling interest with every moment. The new batsman arrived at
the wicket, and again old Stallwood sent the ball sailing down the
pitch, wide as ever, but this time to leg. I watched it more carefully
now. Though it made a high curve, it rose not a hair’s-breadth after
touching ground, but shot straight in. Again we saw the glint of a
falling bail behind the wicket. The Captain thrust both bare arms
deep in his trousers-flap, and silently grinned. The third man did
little better. He succeeded in blocking a couple of the balls; but the

next, more crooked than any, sent him dumbfounded back to the
tent.
There was no more ribaldry about me now. The fourth batsman
sallied out amidst a rustle of whispered apprehension and hard-
drawn breaths, and returned almost immediately to the same tense
atmosphere. Outside on the benches, the old men were rocking on
their seats with delight, like trees in a wind. Bleak, the cobbler, was
careering up and down, beside himself with joy.
‘Fower in a hover!’ he shouted. ‘I reckons I knaws summat about
leather, but I ne’er seed it do the like o’ that! ’Tain’t bawlin’, I tell
ye: ’tis magic!’
And now young Daniel Dray was bowling again, and bowling with
renewed courage and skill. All his old command of length and break
had returned to him. By the end of his over, another wicket had
fallen, and the score had risen no higher than forty-three. The
Captain took the ball once more, this time without any opposition.
At once the fearsome whispering in the tent grew still. Almost we
forgot to breathe, as the great dark hairy fist came slowly up into
the sunlight.
But the Captain had changed his tactics. Instead of the leisurely,
high-curving delivery with which he had done such execution
hitherto, the ball left his hand straight and low and as quick as light.
It pitched no more than an inch or two in front of the waiting bat,
then struck vertically upward. A crack resounded through the field.
The batsman staggered—clapped a hand to his head. A moment
more and he was picking an uneven course towards the tent,
thoroughly satiated with the Captain’s magic.
Very slowly the next man set out for the pitch. He stopped on the
way to tighten a strap of his leg-guard, and again unconscionably
long to adjust his batting-glove. Once he turned back a tallowy face,
and seemed to be in two minds about something. But at length he
got to the wicket and grounded his bat. The long arm uprose again,

and the ball sped. It proved to be the last bowled that day. For
once more that terrible upward break ended with a thud and a yell,
echoed from nine panic-stricken men about me. The luckless
batsman fled with as gory a visage as his companion had done, and
none would take his place, though the grocer charmed and stormed
never so wisely. Windlecombe had won by six.
Later by an hour the victorious eleven gathered in the parlour of the
Three Thatchers Inn, old Stallwood grimly smiling in their midst.
Tom Clemmer shook his fist at him, delight in his eyes.
‘But ’twarn’t crickut, Stall’ard!’ he said reproachfully.
‘Noa,’ returned the old man, ‘not crickut, leastways not all on’t. That
there sing-chin-summat or other—Red Hot Ball, I calls un—that wur
a trick as I larned in Chaney.’
III
How fast time flies you can never truly estimate until you go step
and step with it through the summer woods and fields. In a sense,
town-life—where there is so much of permanence in environment—
puts a drag on time, and not seldom pulls it up altogether.
Moreover, in towns time is estimated by events, by experiences. You
hear a great musician, see a great play, look on at some magnificent
pageant, or are shocked by some catastrophe; and straightway there
is half a lifetime of emotion thrust between two strokes of the clock.
By so much in very truth your life has been lengthened; for it is the
intensity of living that counts in the civic tale of years. If you find an
old man not only declaring that he has lived long, but believing it, it
is a great chance but he tells you so in the close-clipped cockney
tongue of the town.
And yet it is better to live in some far-away country nook like
Windlecombe, and be reminded with every gliding summer hour that
time flies and life is short, if only because of the undoubted fact that
such a frame of mind carries a belief in eternal youth as a necessary

implication. Between life’s dawn and the dusk of its western sky,
there is literally no time to grow old in a natural, aboriginal
environment. So inextricably interwoven are the threads of human
existence and that of the green world round about, that the annual
rejuvenation of the one infallibly communicates itself to the other.
With every spring we start life afresh. Though we may live to
threescore years and ten, we are children still; and come upon death
at last like an unexpected gust at a corner, old age unrealised to the
very end.
In the weeks that are closing now, I have heard and seen more of
the galloping hoofs of this swift, high-stepping jade, summer, than is
good for entire peace of mind. Years ago I made a vow that I would
never again eke out the fleeting golden days, like a miser to whom
spending is not pleasure but only pain. I vowed that I would always
squander time at this season; let it drift by unthinkingly; get my fill
of sunshine, and fill and fill again to my heart’s content; yet do it as
a strayed heifer in the corn, wantoning over an acre to each
mouthful. But this time, as ever, the good resolution has been
forgotten. The old parsimony has dogged the way at every step. I
must be up with the sun in the small hours of each morning, fearful
of losing a single beam from the millions. To waste in sleep the
blue, spangled summer nights, when all the country-side is resonant
of life and fragrant with the scent that comes only with the
darkness, has seemed like sacrilege. Yet, for all my industry, July is
nearing its end, and I know that I have drunk but a drop or two out
of its vast ocean. And already I have renewed the old vow, to be
disregarded as ever, doubtless, when July again comes round.
On all the high-lying corn lands now, harvest has begun; and the
fields in the valley are fast taking on that deep tinge of gipsy-gold
which is the sign of full maturity. Scarce had the shrill note of the
mowing-machine stilled in the meadows, when the deeper voice of
the reaper-and-binder began on the hill. All day long I sat in this
cool quiet nook of a study, and the steady jarring sound came over
to me from the hillside, filling the little room. I saw the machine

with its pair of grey horses, waiting at the field-gate, while the
scythe-men cut a way for it into the amber wall of the grain.
Steadily hour after hour it worked round the field, until at last,
looking forth towards noon, I saw that only a small triangular piece
remained uncut in the middle of the field.
Now there were a score or so of the farm folk waiting hard by, each
armed with a cudgel; and with them seemingly every dog in the
village. As the machine went round, every time making the patch of
standing corn smaller, I could see rabbits bolting in all directions
from the diminishing cover; and there uprose continually a hubbub
of voices from dogs and men. Towards the end, the stubble became
alive with the little dark scurrying forms, fleeing to the surrounding
fields, the most of them escaping harmlessly for want of pursuers.
But even then, as I afterwards learned, some eight or nine dozen
were killed.
I have always kept away from these harvest battues, as indeed from
all scenes of sport and congregations of sportsmen. I am willing
enough to profit by these activities, and receive and enjoy my full
share of the furred and feathered spoil admittedly without one
humanitarian qualm. But this much confessed, I would gladly
welcome the day when everywhere, save in the rabbit warrens, the
sound of the sporting gun should cease throughout this southern
land. Rabbits must be kept down to the end of time; but, for the
creatures that require preservation, too great a price is paid, and
paid by the wrong class. It is not the owner of game-preserves who
bears the main cost of his thunderous pleasuring. It is the lover of
wild life, who sees the hawks and owls and small deer of the
woodlands growing scarcer with every year; and the children who, in
the springtime, are cheated out of their right to wander through the
primrose glades.
To many this may seem a wearisomely trite point of view, affecting a
grievance as old as the hills, and even less likely of obliteration. But
though the point of view is ancient enough, the grievance is no
longer so. Of late years the ranks of village dwellers have been very

largely reinforced from the classes who care little for sport and a
great deal for all other allurements of the country-side. Rural
England is no longer peopled by sportsmen and the dependents of
sportsmen; but, slowly and surely, a majority is creeping up in the
villages, composed of men and women both knowing and loving
Nature, and to whom the old-time local policy of endurance under
deprivation of rights for expediency’s sake, is an incomprehensible,
as well as an intolerable thing. All the vast-winged, beautiful
marauders of the air that I love to watch, are ruthlessly shot down
by the gamekeepers on a suspicion presumptive and unproved; but
the fox that, in a single night, massacres every bird in the villager’s
hen-roost, must go scatheless because poor profit may not be set
before rich pastime.
One day, almost the hottest so far, I was out in the meadows, and
came upon a curious thing. The path, or rather green lane, ran
between high hedges. On either hand there was a great field of
flowering crops, the one red clover, the other sainfoin. There must
have been twenty or thirty acres of each stretching away under the
tense still air and light, much of a colour, but the sainfoin of a softer,
purer pink. Both fields seemed alike attractive to the bees; but
while, to the right, the sainfoin gave out a mighty note of organ
music, the red clover on my left was utterly silent. Looking through
a gap in the foliage, I could not see there a single butterfly or bee.
The truth, of course, was that the nectar in the trumpet-petals of the
clover was too far down for the honey-bee to reach; nor would even
the bumble-bees trouble about it, with a whole province of sainfoin
hard by, over-brimming with choicer, more attainable sweets.
As I wandered along, between these great zones of sound and
silence, the air seemed to grow hotter and more oppressive with
every moment. There was something uncanny in the stillness of all
around me. The green sprays in the tops of the highest elms lay
against the blue sky sharp and clear, as though enamelled upon it.
Not a bird sang in the woodland. Save for the deep throbbing
melody from the sainfoin, all the world lay dumb and stupefied

under the noontide glare. And then, chancing to turn and look
southward, I saw the cause of it. A storm was coming up. Close
down on the horizon lay a bank of cloud like a solid billow of ink. It
was driving up at incredible speed. Though not a leaf or grass blade
stirred around me, the cloud seemed tossed and torn in a
whirlwind’s grip. Every moment it lifted higher towards the sun,
changing its shape incessantly, black fold upon fold rolling together,
colliding, giving place to others blacker still. And flying in advance of
all this, borne by a still swifter air-current, were long sombre
streamers of cloud rent into every conceivable shape of torn and
tattered rags.
And now, as the dense cloud-pack got up, the brilliant light was
blotted out at a stroke, and this startling thing happened. Every
bee, apparently, at work in the vast field of sainfoin, spread her
wings at the ominous signal, and raced for home. They swept over
my head in numbers that literally darkened the sky. Again, literally,
the sound of their going was like a continuous deep syren-note,
striking point-blank in the ear. For a minute at most it endured, and
then died away almost as suddenly as it came. A bleak ghostly light
paled on everything around me. Little cat’s paws of wind flung
through the torpid air. Afar the harsh voice of the oncoming tempest
sounded. Slow hot gouts of water began to fall, and every moment
the inky pall of cloud lit up with an internal fire.
At first, as I made off homeward in the track of the vanished bee-
army, I tried to emulate their speed. But the torrent came surging
and crying up in my rear, and in a dozen yards I was waterlogged.
Thereafter, going leisurely, I came at last into the village, and so to
the house. And here, in spite of the deluge, I must stop and look on
at more wonders. It seemed almost impossible for any bird to
sustain itself on wings under such a cataract. But there above me
the martins were at their old incessant gambols, circling and darting
about, hither and thither, high and low, in a whirling madcap crew;
and higher still, right in the throat of the tempest, I could make out

the swifts, hundreds strong, weaving their old mazy pattern on the
sky, as though in the pearl and opal dusk of a summer’s evening.

THE TEA-GARDEN
AUGUST
I
Old Runridge’s misadventure in wedlock has proved a trouble to
more people than one in Windlecombe. In former years, though
boating parties from the town were continually to be seen on the
river, when the August holiday season began, they seldom pulled up
at our ferry stairs. From the waterside the village had a somewhat
inhospitable look, while a mile farther on there were the North
Woods, Stavisham’s traditional picnicking ground, where, at the
gamekeeper’s cottage, all were sure of a welcome. Such wandering
holiday-makers as found their way into Windlecombe came usually
by road, and were of the tranquil, undemonstrative breed, like
pedestrians all the world over. There would seem to be something
about sitting long hours in a rowing-boat which is detrimental, even
debasing, to a certain common variety of human nature. The
tendency to run and shout and skylark on reaching dry ground again
appears to be irresistible to this numerous class. And it is at Mrs.
Runridge’s door that we must lay the blame of submitting
Windlecombe to a pestilent innovation.
‘Look ye!’ said the old ferryman from his seat in the boat, waving a
scornful hand towards his garden, as I chanced along the river bank
one fine Saturday afternoon. ‘’Twur me as painted un, an’ me as
putt un up, jest fer peace’s sake; but I’d ha’ taken an’ chucked un in
th’ river if I’d only ha’ knowed what sort o’ peace ’ud come on ’t!’

A great white board reared itself on ungainly legs above the elder-
hedge of the garden, and on it, in huge irregular characters,
appeared the single word, ‘TEAS.’ By the side of the ferry-punt half
a dozen town rowing-boats lay moored. And from the green depths
of the garden there arose a confusion of voices, shrill laughter, and
an incessant clatter of crockery. I had hardly realised what it all
meant, when Mrs. Runridge showed a vast white apron and a hot
perspiring face in the gateway. She bore down upon us with
upraised hand, as though she intended bodily harm to one or both.
‘Here, Joe!’ cried she, giving the old ferryman a coin. ‘Change fer
half a suvverrin, an’ shaarp ’s th’ wured! Try th’ Thatchers, or Mist.
Weaverly, or belike— Doan’t sit starin’ there, looney! Dear, oh Lor!
was there ever sech a man! An’ us all run purty nigh off our legses,
we be!’
‘Th’ seventh time,’ gasped Runridge, as we hurried together up the
steep street, ‘or like as not th’ eighth—I dunno! An’ ut bean’t as
though ’a warnted money. Money?—th’ bed bean’t fit fer Christian
folk to sleep on, wi’ th’ lumps in ’t! An’ to-morrer ull be wuss, if ’tis
fine. Lor’ send a hearthquake, or Noah’s flood, or summat!’
When a naturally silent man attempts self-commiseration in words,
his case is sure to be a desperate one. But we are all fated to share
in his trouble now. On any fine Saturday or Sunday in the month,
Runridge will be a familiar figure, hunting down from door to door
the change that, in villages, is so scanty and so hard to discover. On
Mondays we shall all suffer from our foolish kindness in allowing this
reckless exportation of bullion. Only Susan Angel at the sweetstuff
shop, and her small customers, will be unincommoded; for the
handful of battered farthings that has served them as currency
during whole decades past will be necessarily saved by its
insignificance, and will remain, no doubt, in the village for service
amidst generations yet unborn.
But disturbing visitors to Windlecombe do not all come by the river.
There is an iniquitous job-master in Stavisham who has long had the

village in his evil eye; and at intervals, fortunately rare, he descends
upon us with charabancs drawn by three horses, and filled with
heterogeneous human gleanings—the flotsam and jetsam of holiday-
land strayed for the day into Stavisham from contiguous seaside
towns.
They come in families, in amorous couples, in collective friendships
of each sex and every number and age. They bring baskets of
provisions, cameras, balls wherewith to play rounders on the green;
and of musical instruments many weird kinds—concertinas, mouth-
organs, babies, and often yapping terriers that set all our own dogs
frantic on their chains. An altruist, whose convictions have grown up
amidst the quiet slow neighbourliness of the country, never finds his
principles less easy of application than when he must atune himself
to the holiday moods of people escaped from the town. There is no
harm in all the shouting and laughter and fatuous horseplay.
Inebriety is practically extinct among those who make summer the
season, and the country the scene, of their year’s brief merry-
making. And yet it all seems mistaken, reprehensible, on the same
principle that a blunder is worse than a crime. It is futile to tell him
so, unless he already knows it, and then it is equally unnecessary;
but when the day-tripper learns to enjoy himself on the green
country-side in the true spirit for which the sun was made to shine
and the flowers to grow, he will have found the Philosopher’s Stone
that is to change, not mere lead and iron, but Time and Life
themselves into gold.
On most mornings in August the more careful of us will go about
thrusting greasy paper-scraps out of sight under bushes, flicking the
incongruous yellow of banana-peel into obscure corners, lamenting
stripped boughs, and marvelling at nosegays thrown heedlessly
away, as if the joy of them had lain in the mere plucking. But all the
strange folk that use the village for their pleasuring at this time, do
not leave these unlovely tokens behind them. Only yesterday, as I
sat on the edge of the old worked-out, riverside chalk-pit here—
whence you have a view north and south of the glittering water for

miles—there came a new sound in the air, and I must throw aside
my sheaf of galley-proofs to listen. The sound came from the river,
and was still afar off. Many voices were joined in singing one of the
old catch-songs, which go round a circle of three or four phrases,
and to which there is never an end until you make an end of its
beginning in slow time.
The sweet medley grew louder and clearer, and presently there was
united to it the rhythmic plash of oars. A great tarry old sea-boat
came round the water’s bend, holding a party of a dozen or so. At
last the labouring craft and the music came to a halt together, and
the singers clambered ashore. I should have forgotten all about
them now, for they soon passed out of sight amid the waterside
foliage. But as I was coming homeward up the village street, I
heard the voices again; and there, under the Seven Sisters on the
green, the little company were standing together, singing apparently
for their own solace and delight. It was a strange thing, here in
unemotional England, and many of the village folk had been drawn
wonderingly to their doors. Yet the singers did not seem to remark
this, nor to regard their action as anything out of the common. For,
the song finished, they broke into several parties and sauntered on,
talking quietly amongst themselves as if to make music were part of
the daily conversation of their lives.
All that afternoon, from the quiet of my garden, I heard the voices
at intervals, and from different points about the village, near and
far. Once I saw the party right on the top of Windle Hill, strolling
about in twos and threes, looking like foraging crows on the
heights. After a while I saw them get together in a little circle; and
then, right at the ear’s-tip, I could just catch the higher notes of
their singing—a strange wild song, much like the song of the larks
that must be contending with them up there against the blue sky.
The last I saw of this mysterious company was at sunset, from my
perch over the chalk-pit again. They had already embarked when I
arrived, and had got their little ship well under way. The oars were
dipping steadily to the same old catch-song that had brought them

hither: there was still a faint throbbing echo of ‘White Sand and Grey
Sand’ upon the air long after the sun had plunged, and the pale half-
moon was beginning to enter a timid silver protest against the
lingering crimson in the sky.
II
Near upon half a century I have lived in the world, and cannot yet
say of the wind whether I hate it or love it most.
It is a dilemma that comes only to the dweller in the country, for in a
town no sane man can be in two minds on the matter. With a
careering, mephitic dust choking up all organs of perception, and the
risk of being cloven to the chine by a roof slate or lassoed by a loose
electric wire, no one can think of wind, hot or cold, without heartily
wishing it gone. But in the country, though for my old enemy, the
northeast wind, I have nothing but fear and detestation at all
seasons, warm gales, whether in winter or summer, come as often in
friendly as in inimical guise. Like certain of the Hindu gods, the wind
must be content to be treated according to the outcome of its
activities, and receive laudation or revilement as this prove fair or
foul.
All through to-day the south-west wind has been volleying up the
combe, and everywhere in the village there has been a hubbub of
slamming doors and rattling casements, and the flack and clutter of
linen drying on the garden lines. People fought their way step by
step down the hill against the wind, and tripped lightly up it, the
oldest and feeblest forced into a smart jog-trot. Aprons were blown
over faces, and hats snatched off at corners. The trees
overshadowing the village have been lashing together, and roaring
out a deep continuous song. The three thatchers on the inn sign,
each with a gilded hod of straw, have been flashing signals up to my
window every time the sun broke through the flying storm-wrack;
and a hundred times in the long day some riding witch of a rain-
cloud has tried to drench us, but each time the south-west gale has

seized it by the tattered skirts and chevied it away over the hills
before it could shed a dozen drops.
But it has been a good wind all through, and fine heartening
weather; and I have been glad to be abroad in it whenever I could
spare or steal an hour. Said the old vicar, as we climbed up Windle
Hill together this morning, his long white beard flowing out before
him as he lay back on the blast:
‘I know what you would have done, if I had let you choose the way.
You would have struck deep into the woods, like the butterflies, and
missed all the healthy buffeting of it. But there is only one place for
a man to-day, and that is on the open Down. It never pays in the
long-run in life to study how to keep out of the way of hard knocks.’
The sunshine raced ahead of us, vaulted the hilltop, and was gone.
A scatter of warm rain drove out of the grey heaven. I turned up my
coat-collar just in time to intercept the returning sun.
‘True,’ said I, ‘but the good of hard knocks depends not on their
frequency, but on the profit you extract from them. I get and keep
designedly as much of this as I can, so a little goes a long way with
me. And I love the quiet and stillness of the deep wood, when the
wind is roaring out in the open. If we had gone there to-day, we
should have found the rosebay willowherbs in full bloom, and more
butterflies upon them than you could find in a week elsewhere.
Besides, the ups in life are just as good for one as the downs. I can
admire the old Scotch pine that clings to the bare hill-top through a
century of winter storms, but I must not be inconsiderate of the
lilies.’
The old Windlecombe vicar has a way of dealing with notions of this
kind which is good for his hearer, whether he allow himself
convinced, or consider his dignity affronted. He ventilates such
ideas as he would let light into a room, by dashing a rough hand
through the dust-grimed window. It is a method unpicturesque and

often brutal, but effective and salutary in the main. I owe him
gratefully many a pretty rainbow bubble of conceit exploded.
‘Pluck your head out of the sand,’ quoth he, ‘for your ragged hinder-
parts are visible to all the world of honest eyes. The pine and the
lily are not choosing creatures. To them is their environment
allotted, but to you is given the wilful fashioning of it. A man may
be either gold or iron—made either for beauty or for use. But the
one will not decorate, nor the other uphold the world, if he shirk the
fires that must first refine or temper him. So away with your foolish
Sahara tricks, and get on with the work the moment brings you.’
By this he meant I was to look about me, and tell him what I saw as
we went along, a duty in which I was too often an unintentional
malingerer.
‘Yesterday a Londoner was in the village,’ I told him, for a start, ‘and
he was scoffing at our Downs. “Where,” said he, “are the green
highlands of Sussex I have read so much about? Why, the hills are
not green, but brown!” And it was quite true at this season, and
from his standpoint down in the valley. Up here we can see what
gives the Downs their rich bronze colour in summer-time. From
below they looked parched and sunburnt, as though nothing could
grow for the heat and drought. But now I can see that the general
brown tone is really a mingling of a thousand living hues. Looking
straight down as you walk, the turf is as green as ever it was; but a
dozen paces onward all this fresh verdure is lost under the greys and
drabs of the seeding grass-heads. Then again, the brown colour is
due just as much to the blending of all other colours that the eye
separates at a close view, but confuses from afar. We are walking
on a carpet of flowers; we cannot avoid trampling them, if we are to
set foot to the ground at all. Yellow goatsbeard and vetchling, and
the little trefoil with the blood-red tips to its petals, and golden
hawkweed everywhere; for blues, there are millions of plantains,
and sheepsbit, and harebells; and the wild thyme purples half the
hillside, making the bright carmine of the orchids brighter still

wherever it blows. But I have not reckoned in half the flowers that
—’
‘Hold, enough! I am sick of your Londoner, and of every human
being for the moment. Listen to the free, glorious wind! Down in
the valley there we always think of the wind as a creature with a
voice—something striding through the sky and calling as it goes.
But up here we know that it is the earth that calls. Hark to it
swishing, and surging, and sighing for miles round! The sound is
never overhead on these treeless wastes, but always underfoot. You
keep head and shoulders up in the soundless sunshine, and walk in
a maelstrom. Did you ever think that the larks always sing in the
midst of silence, no matter how hard the wind blows? Those are
George Artlett’s sheep we are coming to, are they not? I ought to
know the old dog’s talk!’
I scanned the hills about me, but could see no sign of sheep,
shepherd, or dog. But as we drew to the edge of the wide plateau
we were traversing, and got a view down into the steep combe
beyond, there sure enough were all three. The sheep, just growing
artistically presentable after their June shearing, were scattered over
the deep bottom, quietly nibbling at the turf. Far below, in the
shadow of a single stunted hawthorn, sat young George Artlett
scribbling on his knee. No doubt Rowster had been lying by his
master’s side, until our shadows struck sheer down upon him from
the brink of the hill. But now he was up and pricking his ears
sharply in our direction, growling menaces and wagging a welcome
at one and the same time. I gave the Reverend what I saw in few
words. To my surprise he began to descend the steep hill-side.

‘After all,’ said he, ‘George Artlett and I never really fell out. But we
agreed to differ, and that is the most fatal, most lasting
disagreement of all. I should have known better. I think I will risk a
hand to him again.’
As we clambered down the precipitous slope, into the shelter of the
combe, the wind suddenly stopped its music in our ears. There fell
a dead calm about us. At the bottom, we seemed to be walking
between two widely separated, yet almost perpendicular cliffs of
green, with a great span of blue sky far above, across which the
heavy cumuli raged unceasingly. George Artlett got to his feet at our
approach, thrust his paper into his pocket, and gravely clawed off his
old tarpaulin hat. He took the hand held out to him with wonder,
and a little hesitation.
‘And how fares the good work, George?’

Artlett was silent a moment. He tried to read the sightless eyes.
‘Shepherdin’, sir? ’Tis allers slow goin’, but goin’ all th’ time. We did
famous with th’ wool, an’—’
‘George, leave the wool alone. You know what I mean.’
George Artlett swung round on his heel, and swung back again. He
counted the fingers on his gnarled hand slowly one by one.
‘Be ut priest to lost runagate, or be ut man to man?’ he asked,
looking up suddenly.
‘It is just one child in the dark way putting forth hand to another.
For, to the best of us, George, comradeship can be no more than a
heartening touch and sound of a footstep going a common road,
and the voice of a friend. Do you see a light at the end of your
path?’
‘Ay! I do that!’
‘Look closer. Is not the light just the shine of a Beautiful Face, very
grave and sorrowful, but with a great joy beginning to spread over
it, and—’
Though the deep voice stemmed on in the sunny quiet of the
combe, I could distinguish the words no longer; for something, that
was by no means part of me but of a more delicate nurture, had set
my feet going against my will. I was halfway down the long alley of
the combe before I stopped to wait for the old vicar. And then,
looking backward, I fell to staring with all my eyes.
‘Reverend,’ said I, after he had rejoined me, and we had walked on
together in silence for a minute or two, ‘I wish you could see what is
before me now.’
I had brought him out of his reverie with a jerk. ‘Well: on with it!’
‘I see a green sunlit space, with the shadow of an old hawthorn
upon it. And in the shadow I see two men kneeling, bareheaded,

their faces turned up to the sky. And with all my heart I wish there
were a third with them; but there is not another fit for such
company, to my certain knowledge, within ten thousand miles.’
He seemed to weigh his reply before he uttered it. But:—
‘You’re a good fool,’ said he, ‘and I love you. And there were three
there, nay! a Fourth,—all the time.’
III
In winter-time, ‘when nights are dark and ways be foul,’ I can
conceive of no pleasanter aspect of village life at any season than
the indoor, fireside one; but when the long radiant August evenings
are here, there is equally no other time for me. More and more,
with every year that glides by, life in Windlecombe at this season
seems to focus itself round the Seven Sisters’ trees upon the green.
All the summer day through, the old folk gather there; and always a
low murmur of voices comes drifting up to my window from their
garrulous company. But it is after the day’s work is done, and all,
able or disable, are free for recreation, that the true life of the place
begins.
There is something about the ease-taking of men physically tired
after a long day’s work in fresh air and sunshine, that fascinates one
who is only mind-weary, and that alone from much chaffering with
pen and ink. Though you have but cramped limbs to stretch out
over the green sward, and, by comparison, but a torpid, attenuated
flow in your veins, somewhat of your neighbour’s healthful, dog-tired
humour over-brims upon you; and after a pipe or two, and an hour’s
slow desultory chat, you can almost forget the tang of the study, the
reek of old leather burdening imprisoned air, and congratulate
yourself on a man’s work manfully done, albeit vicariously—the day-
long tussle with the good earth, mammoth ‘nunches’ and ‘eleveners’
devoured under hedgerows, a shirt a score of times soused with
honest sweat, and as many dried by the thirsty harvest sun.

All the old Windlecombe faces were there to-night under the
drooping pine boughs, and most of the middle-aged ones. The
younger men and boys were down on the Mead at cricket practice,
and there they would stay as long as a glimmer of daylight remained
in the sky. But the sun had still a fathom to go before it would lie,
red and lusty, caught in the toils of the far-off Stavisham hills. I
evaded with what grace I could the cake of ship’s tobacco held out
to me by Captain Stallwood, accepting as fair compromise a charge
from the tin box of old Tom Clemmer, his dearest friend. Gradually
the talk got back to the point where my coming had intersected it.
‘’Tis trew,’ said the Captain now, ‘trew as I sets here on a plank o’ th’
ould King, as ye cut an’ shaped yersel’, Dan’l.’
I followed his glance round the circle of benches. There was not a
head among the company but was wagging dubiously. Old Daniel
Dray’s face was an incredulous, a horrified blank.
‘What!’ said he, ‘a human critter swaller seventeen live—’
‘I seed it,’ interrupted the Captain, pointing his pipe-stem solemnly
at us for emphasis, ‘I seed it wi’ my own pair o’ eyes. Little lirrupy
green chaps, they was, all hoppin’ an’ somersettin’ i’ th’ baasket. An’
th’ blackamoor, ’a putts ’a’s mouth to th’ lip o’ it, an’ “hap! hap!” sez
he, an’ every time ’a sez it, wan o’ ’em jumps in. An’ when they was
all down, ’a gies a sort o’ gruggle, an’ skews ’a’s head ower th’
baasket, an’ “hap! hap!” sez he agen, an’ every time ’a sez it, out
pops— But there! ’tis no sense tellin’ ye! Folks sees naun o’ th’
wureld i’ little small village places, an’ an’t got no believes.’
He was silent a while, then brought out a tobacco-box like a brass
halfpenny bun, and held it up to the common view. It was old and
battered, and had certain initials scratched on the lid. The Captain
fingered it in mournful reminiscence.
‘Lookee now,’ he said, ‘I doan’t rightly know as I ever telled ye.
“G.B.” That bean’t Tom Stall’ard, be ut? Ah! No, sez all on ye,

ready enow. ’Twur George’s, ould George Budgen as— Dan’l, what
year war’t as I went aff to sea?’
Daniel Dray’s lips moved in silent calculation.
‘Seventy-three belike, or maybe seventy-four, ’cause ye’d been gone,
Joe, a year afore Harker’s coo slipped the five-legged heifer, an’ that
wur—’
‘Ay! trew, Dan’l. An’ George Budgen, ’a wur shipmate along o’ me
purty soon arter I gooed away. Well: an’ this here baccy-box—th’
least time as I seed ut i’ George’s haand, ’a took a fill out av ut, jest
afore ’a went on watch. An’ ut come on to blaw that night—Gorm!
how ’t did blaw! An’ rain, not aarf! An’ i’ th’ marnin’ never a sign o’
pore George Budgen to be seen! Well now, full a fortnit arter that,
what ’ud we do but ketch a gurt thresher on a trail-line, an’ inside o’
th’ crittur what ’ud we find but a halibut, big as a tay-tray, all alive
an’ lippin’, ’a wur. Sez th’ cappen—I wur ship’s-boy then—“Joe,” sez
he, “git an’ clane un, an’ I’ll ha’ un fer me supper,” ’a sez. Now then,
Dan’l, ye’ll never believe ut, but trew as ye sets there, clink goes my
knife agen summut inside o’ th’ halibut, an’—’
‘Goo on, Stallard!’
‘He, he! We all knaws what be acomin’, cap’n!’
‘An’ there wur—ah! but ye’ll ne’er believe ut, not if ye was Jonah
hisself—there, inside o’ th’ halibut wur a gurt rusty hook as— What-
say, Dan’l?’
‘Doan’t ’ee say ut agen, Dan’l! You a reg’lar prayers-gooer, too!’
The Captain filled his pipe from the box, tragically ruminating in the
silence that followed.
‘Ah! pore George Budgen! ’A little knowed as ’twould be th’ laast
time as ’a ’d pass his tobaccer-box to a friend!’

The sun had long set, and the dusk was creeping up apace. Here
and there in the shadowy length of the street, lights were beginning
to break out.
Where we sat under the dense canopy of pine-boughs, night had
already asserted itself, and to one another we were little more than
an arc of glowing pipe-bowls. Old Stallwood chuckled richly from his
corner. A sort of inspiration of mendacity seemed to have come over
him to-night.
‘But Lor’ bless ye!’ he went on, ‘that bean’t nauthin’!—not when
ye’ve been five-an’-thirty year at sea. I knowed a man wanst as
worked in a steam sawmill way over in Amurricky somewheres; an’
what did ’a do wan fine marnin’ but get hisself sawed i’ two pieces;
an’ wan piece died—th’ doctor cud do nought to save ut. But t’other
piece kep’ alive for ten year arterwards—ah! an’ did a man’s work
every day!’
Old Daniel bounced to his feet. He breathed hard for a full half-
minute.
‘Joe Stall’ard!’ he said at last, severely, ‘shame on ye fer a reg’lar,
hout-an’-hout, ould leear! A man cut in two? An’ lived ten year
arter—leastways th’ wan part o’ him? Fer shame, Joe! ’Tis traipsin’
about i’ all they heathen countries, I reckons, as has spiled ye! Ah,
well, well-a-day! There they be, lightin’ up at th’ Thatchers! Coom
along, Tom Clemmer!’
Three squares of red shone out amidst the twinkling dust of the
street, denoting the curtained windows of the inn. It was the signal
for which all had been waiting, and a general stir took place in the
assembly. At length none remained about me but the old seaman.
He had said nothing while the dismemberment of the group was in
progress, but had sat shaking in silent merriment. Now he, too, got
slowly to his feet.
‘’Tis wunnerful,’ he observed, moving away, ‘real onaccountable, th’
little simple things as some folks wunt b’lieve. There be a thing

now, as—’
But this story of partitioned, yet still living humanity, even though it
came from America, was too much also for me; and I told him so.
He stopped in his easy saunter towards the inn.
‘’Tis trew!’ he averred as stoutly as ever. His rich, oily chuckle came
over to me through the darkness. ‘Mind ye! I didn’t say as th’ man
wur sawed into two ekal parts: ’twur but th’ thumb av him as wur
taken off. Belike I’ll jest step acrost to th’ Thatchers now, an’ tell
that to Dan’l.’

SEPTEMBER
I
August holiday-makers in Windlecombe are mainly of the normal,
obvious kind, the people for whom guide-books and picture
postcards are produced, and by whom the job-masters and the boat
proprietors gain a livelihood. But September brings to the village a
wandering crew of an altogether different complexion. There is
something about the temperate sunshine and general slowing up
and sweetening of life during this month, that draws from their
hiding-nooks in the city suburbs a class of man and woman for
whom I have long entertained the profoundest respect. With every
year, as soon as September comes round, I find myself looking out
for these stray, for the most part solitary, folk, and, in quite a
humble, unpretentious spirit, taking them beneath my avuncular
wing.
That they seek the quiet of an inland village in September, and not
the feverish, belated distractions of the seaside town, is an initial
point in their favour. But almost invariably they bring with them a
much more subtle recommendation. They are down for a holiday,
but they have come entirely without premeditation. Suddenly
yielding to a sort of migratory impulse, they have locked up dusty
chambers, or left small shops to the care of wives, or begged a few
precious days from niggardly employers; and come away on a spate
of emotional longing for country quiet and greenery, irresistible this
time, though generally the impulse has been felt and resisted every
autumn for twenty years back. Indeed, there must be some

specially fatal quality about this period of time, for I constantly hear
the same story—no holiday taken for twenty years.
At noon to-day, after a long tramp through the fields, I came up the
village street, and paused irresolutely outside the Three Thatchers
Inn. The morning had been hot, and the walk tiring; moreover, it
was the first of September, and the guns had been popping
distressfully in all the coverts by the way. I knew that before
sundown a brace or two of partridges would be certain to find their
road to my door; but this did not prove, and never has proved,
compensation for the flurry and disturbance carried by the noise of
the guns into all my favourite conning-places, or arenas for quiet
thought. The whole world of wild life was in a panic, and I with it.
The red-ochred doorstep of the inn glowed in the sunshine at my
feet, and from the cool darkness beyond came a chink of glasses
and murmur of many tongues. It all seemed eminently consolatory
for the moment’s mood. Within there, no one would fire a gun off at
my ear, nor stalk past me with a shoulder-load of limp, sanguinary
spoil, nor warn me out of my favourite coppices with a finger to the
lip, as though a nation of babies slumbered within. I was a lost man
even before I began to hesitate. I stood my stout furze walking-
stick in the porch beside a drover’s staff, a shepherd’s crook, and
three or four undenominational cudgels; and plunged down the two
steps into the bar.
Now, before my eyes had accustomed themselves to the subdued
light, and I could see what company was about me, I had become
aware of a strange odour in the air. It was the scent of a tobacco,
happily unknown in Windlecombe: neither wholly Latakia nor
Turkish, not honeydew alone nor red Virginia, cavendish nor returns,
but a curious internecine blend of all these. I knew it at once to be
something for which I have a constitutional loathing—one of the new
town mixtures, wherein are confused and mutually stultified all the
good smoking-weeds in the world.

Looking more narrowly about me, after the usual greetings, I
discovered a vast and elaborate meerschaum pipe in the corner, and
behind it a little diffident smiling man. But this could not entirely
account for the overpowering exotic reek in the room. I missed the
familiar smell of our own good Windlecombe shag, although there
were half a dozen other pipes in full blast round me. And then I
realised the situation. The stranger had seduced all the company to
his pestilent combination; and now, as I lowered at him through the
haze, he was holding out his pouch even to me, who would not have
touched his garbage if it had been the last pipe-fill left on earth. But
he took my curt, almost surly refusal as if it were an intended
kindness.
‘Ah! you do not smoke? Well: it does seem a kind of insult to the
pure country air. But in towns, you know, what with the din and the
dust, and the strain on one’s nerves, everybody— And of course I
must not quarrel with my bread-and-butter!’
I produced my own pipe and pouch, and filled brutally under his
very nose. Serenely he watched the operation, and without a trace
of offence.
‘I am in the trade, as I was telling these gentlemen here when you
came in. Do you know the Walworth Road, in London? My shop is
just behind the Elephant, and any day you are passing, I— But
wasn’t I glad to get away, if only for the few hours! And I do assure
you, sir, I haven’t been out of London for nearly—nearly—’
‘Twenty years, I suppose?’
He looked at me in placid surprise.
‘Lor’, how did you know that now? But it is quite true. Being single-
handed, you see, it isn’t easy to— But I was glad, I tell you! And I
had never seen a real country village in my life, until I got out of the
train at Stavisham and walked on here. Isn’t it quiet! And how
funny it seems—no asphalt-paving, and no wires running all ways
over the house-tops, and the singing-birds all loose in the trees!

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