Valuation of debtors, Auditing

Valuation of Debtors

Debtors are valued simple like other assets at the lower of cost and total realisable value. Valuation of debtors is actually a consideration of where the provision for doubtful and bad debts is adequate or not.  Therefore the auditor must consider the following matters:

i. How adequate is the system of internal control as far as suitable of credit and follow up of poor payers is related;

ii. The duration of credit allowed and taken;

iii. The balances have subsequently been settled through whether the date of the audit

iv. Whether an account is made up of particular items or not;

v. Whether an account is under the maximum credit allowed;

vi. The market values of any securities where any that have been lodged like collateral;

vii. Common information for debtors from collectors, trade relatives or other publications;

viii. The matters of set off;

ix. Where there are any legal proceedings, such the state of those proceedings and the legal status of any debtor;

x. The effects of the statute of limits;

xi. Comparing of debtors to sales this year along with previous duration, budgets and other companies;

xii. Evidence such any debt is in dispute for non delivery, poor quality or breakages.

It should be noted such that any debts that are considered bad should be written off to the loss and profit account. Provisions for doubtful debts should be set up against debts that are considered doubtful. Some companies have the habit of creation round sums or percentage provisions for doubtful debts. This practice is usually unacceptable to an auditor unless it is based on good statistical evidence that may come from past experience or such may come from data about another similar undertaking that is obtainable from trade associations or which is publicly available.

Posted Date: 1/28/2013 12:17:39 AM | Location : United States







Related Discussions:- Valuation of debtors, Assignment Help, Ask Question on Valuation of debtors, Get Answer, Expert's Help, Valuation of debtors Discussions

Write discussion on Valuation of debtors
Your posts are moderated
Related Questions
This charter defines the mission, independence and objectivity, scope and responsibilities, authority, accountability and standards of the Internal Audit function. A charter i

Valuation of Debtors Debtors are valued simple like other assets at the lower of cost and total realisable value. Valuation of debtors is actually a consideration of where the

Procedures followed in Conducting an Audit Procedures generally followed in conducting an audit by more than one firm of accountants and the division of work between them.

Authoritative Document is IAS 17 Leases The suitable technique of amortization or depreciation to require in the case of leasehold property and freehold buildings is straight-

B. The following situations involve a possible violation of the MIA ByLaws (on professional ethics, conduct and practice). For each situation, (1) decide whether or not the Code ha

Prepayments - Audit Process Prepayments similar to accruals are not mostly checked through the double entry system. This creates them susceptible to mistake. The auditor's pro

how do internal controls affect or improve the goals of a bussiness firm

A municipal village or a nonprofit organization solicits bids for the annual audit from local audit firms, and the firm with the lowest bid is selected. Answer the following que

As per the standard audit engagement letter signed between external financial statement auditor and client/ auditee, auditor's primary role is to detect fraud. Ans: No, the prim

What fundamental accounting concepts must you keep in mind in preparing to carry out your audit? Accounting Concept and Records Fundamental Accounting concepts are cove