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Norman has not paid an invoice dated 5 June 2007 for YE 28 February 2007.
So the invoice is overdue 1 year. Current year audit is almost complete and invoice has not yet been issued.Norman is suffering poor cash flows and is unable to pay the balance.
Is it ok to undertake discussion with Client and set up a payment schedule ie. offering payment in tranches. All in all we want our money to be paid.
Is it allowed for audit firms to set up such arrangements with audit clients?
Is it an appropriate recommended action in this particular scenario?Thank you Sir.
It’s a bit late for this type of action! You shouldn’t have even commenced this year’s audit!
And what wording are you going to us ein your audit report? “Going concern” seems like it could be appropriate!
I wouldn’t go any further with reference to this year’s audit until last year’s account has been settled, IN FULL
And sensibly you would set up a payment schedule for this year’s fee including an amount payable NOW as an interim payment towards the cost of this year’s service – raise an invoice today in respect of this year’s payment on account and say “No more work until last year has been fully paid and we have received the invoiced amount in respect of this year’s invoice”
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