- This topic has 1 reply, 2 voices, and was last updated 12 years ago by
.
- Posts
Dear Tutor,
I often have problem in checking against the provision, say, for doubtful debt. Other than the following procedures, would you mind advising what else I shall consider:
(i) Enquire with the management about the reasonableness of the provision;
(ii) Review the reasonableness for the bad debt provision in the prior years.Thank you in advance for your help.
Also:
(1) Look at the pattern of amounts owed. The older the amount, the more likely it is that a provision will be needed.
(2) Look at board minutes as you would expect serious problems. to have been discussed.
(3) Look for amounts owing in excess of the credit limit.
(4) Search news sites for evidence that the customer might be in trouble.
(5) Look at the customer’s latest financial statements for evidence of poor liquidity.
(6) Look at amounts received from customers after year end.
- You must be logged in to reply to this topic.