1) Specific allowance for doubtful debts.
• Compile a list of debtors who were given the allowance and find out the reason why the
allowance was given based on documentary evidence like correspondence between the
company and the customer.
• The reasonableness of the provision should be assessed
• Check the material accounts that will require provision
• Correspondence from customers should be reviewed to identify complains which may
require specific provisions
• Review the events after the reporting period and confirm whether cash was received from
the customers whom specific provision was made.
• Returns from debtors should be reviewed for individual material balances which may
require specific provisions.
• Arithmetic accuracy should be determined by re-computing the allowance.
• Perform analytical review procedures to compare the allowance of the previous year with
that of the current year so as to determine its reasonableness:
ii) Trade payables.
1. Obtain a creditors listing and verify that the total per the listing agrees with the total per
the ledger.
2. From the listing select a sample of creditors and carry out the following procedures
• Obtain or prepare a reconciliation of the creditors balance per the ledger to the
suppliers' statements.
• Obtain explanations for all the reconciling items and where appropriate ensure that
the reconciling items have been adjusted in the books of account. The reconcilinp,
items will mainly include suppliers invoices not posted in the clients ledger or
payments not reflected in the suppliers statements.
3. Obtain a sample of payments made to suppliers after year- end and verify that all the
invoices that related to the period under review had been accrued for.
4. Obtain all the pending invoices and verify that these had been accrued for.
Kavungya answered the question on May 14, 2019 at 14:00
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