Audit Work On Trade Debtors: Ascertainment Of Adequacy Of Bad Debts and Provision for Doubtful Debts
The auditor will need to be satisfied that the figure appearing in the balance sheet for trade debtors is all receivable. The auditor will have to be satisfied that an adequate provision had been made for all debts.
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1. Obtain a detailed age analysis of the year end of debtors and test the analysis for a selection of the balances; 2. Obtain an analysis of the provision for doubtful debts; 3. Scrutinize the analysis and identify those debts which appear doubtful; 4. Discuss with management their reasons, if any of these debts are not included in the provision for bad debts; 5. Perform further testing where any disputes exists; 6. Reach a final conclusion regarding the adequacy of the bad debts provision
REFER TO MORE ARTICLES ON TOPIC ON AUDIT WORK ON TRADE DEBTORS
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