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Q; if the key customer is in financial difficulties and would pay on break up basis of 6 months and the finance director is claiming not to create any allowance for this ,
as it is a an audit risk
my query is that the auditor response for the allowance is written: to review whether any general allowance for uncollectible accounts is sufficient to cover the amount of this receivable. ( i did not understand what it means please explain me )?
Generally, this would imply that a specific allowance was required. However, if that has not been made, the receivables might still be shown at a fair value if the general provison was large enough to cover that and other, yet to be identified, bad debts.
Which of the IAS and IFRS I need to know to solve an audit risk question.
Just read the relevant notes, listen relevant lectures and do relevant questions. On no account read ISAs or IFRSs.