• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

detection risk

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › detection risk

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 28, 2021 at 12:30 pm #626526
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    sir why does detection risk increase if there is a tighter reporting deadline?

    June 28, 2021 at 12:48 pm #626527
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6804
    • ☆☆☆☆☆

    Because there’s increased risk that sufficient appropriate audit evidence will not be obtained. Consider for example – y/e 31 December – material trade receivables and average collection period 60 days. If reporting deadline end of May, that’s plenty of time to be auditing after-date cash receipts to confirm the recoverability of receivables and the adequacy of any allowance for irrecoverable debts. If reporting deadline was end of March, say, there will be less evidence of recoverability available.

    July 5, 2021 at 7:26 am #626992
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    ma’am even after 60 days the TRs are not received then what do the auditors do? Create an allowance for TRs? or directly declare them as bad debts?

    July 5, 2021 at 10:39 am #627008
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6804
    • ☆☆☆☆☆

    It is management’s responsibility to prepare the financial statements and therefore management’s responsibility to make a suitable allowance or write off a debt as appropriate in the circumstances. Management may know a particular customer to be simply a poor payer who will only pay when they receive a “red letter” (i.e. a final demand before taking the debt to court). In this case they may make no allowance. The company is likely to have a policy of first making an allowance (which keeps the debt recorded in the books) and only to write it off when every avenue of recoverability has been exhausted.

    The auditor’s responsibility is to obtain sufficient appropriate audit evidence regarding the assertions associated with trade receivables which for valuation means the allowance must be adequate.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • tobimillz100 on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • omarcham on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy