Saturday, March 9, 2013

Identification of Doubtful Debt

How do we recognize possible doubtful client when performing audit ?

We've got to recognize the doubtful receivable just before assessing the prospective provision of doubtful debt for respective client. Noted that, provision of doubtful debt really should be assessed on a specified basis. Basic provision is no longer permitted in IAS 39. IAS 39 calls for existence of objective proof of impairment on doubtful receivable. Basic provision will not take into consideration of any proof.
Identification of Doubtful Debt

Let's come back for the subject on how do we recognize slow moving debtors step-by-step:

1. Obtained trade debtor aging listing ( by client) as in the balance sheet date
2. Think  consideration to debtors that have outstanding debts overdue greater than 60-90 days
( the numbers of  days may very well be changed as outlined by the business norm)
3. Chosen the debtors ( with important outstanding extended outstanding debts as outlined by the audit materiality with the engagement

In quick, we analyze the debtors who has: 1) extended outstanding balance ( commonly overdue greater than 60- 90 days) and 2 the extended outstanding balance is viewed as material for the goal of audit.

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