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
Assertions about classes Assertions about classes of transactions and events for the period under audit : a) Occurrence -events and transactions which have been recorde

Transferee Liability - A person may be held LIABLE for another taxpayer's delinquent taxes if: 1. The transferee received assets of the transferor-taxpayer; and 2. The transf

Question 1: What do you meant by Proactive Project Management? Define Proactive Project Management Bring out significance of Proactive Project Management with an exa

Planning for Stock taking Stock taking should be planned well in carried out and advance carefully and systematically through persons fully informed of the duties involved. Th

Existence - Audit Process In the case of tangible assets existence is confirmed through the auditor visually, considering the asset examining and concerned its condition.  Thi

Trademarks and Patent Trademarks and then written off over their useful lives and patents may be capitalized along with any renewal fees being charged to revenue. Whether a tr

Kelley Brent, CA, is a partner in a one-office CA firm that audits Dane, Inc., a closely held corporation. Kelley''''s sister was recently appointed as the chief financial officer

The Business Risk Approach to Auditing In recent years the broader concept of business risk has been developed by the larger firms. It was the subject matter of the ICAEW audit

Prepare a narrative describing the transaction cycle process for debt in a municipality.

Fortex Limited, the meat processing firm, was formed in 1985 from three smaller companies. In 1993, however, after a few years of spectacular growth, the company collapsed. a)