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What is Debtors’ circularization and what are it's purposes?

      

What is Debtors’ circularization and what are it's purposes?

  

Answers


Wilfred
This is a procedure by which the auditor obtains corroborative evidence regarding the existence,
ownership and the value of debtors appearing in the financial statements. This is done by writing
directly to the debtors and requesting written confirmation to be sent directly to the auditor.

Purpose for circularization
•• To provide independent third party confirmation of the existence of the debt.
•• To confirm the ownership rights to the amounts owned.
•• To confirm the money amount.
•• To provide support to compliance tests as to the functioning of the internal control over sales and debtors.
•• To bring to light any disputed amounts which could point out irregularities or frauds in the area of debtors.
•• To support other evidence with regard to the effectiveness of the cut-off procedures.
Wilfykil answered the question on April 12, 2019 at 06:24


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