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spadefish
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In the answer it is written that if the difference is due to credit notes this should be agreed to pre year end credit notes dispatched around the year end date.
What does this procedure mean
I could have replied 2 days ago if you had given context to the Q – I don’t know Qs “off the top of my head” to know what “difference” you are referring to.
In a receivables ledger (illustration):
Audit client’s books says customer “owes” them -$100 (Credit) – i.e. customer doesn’t owe the company anything, rather the company owes the customer.A valid reason for a credit balance is that the company has raised a credit note – you should know that this might cancel/reverse a sale when goods are returned (for example), or if the customer has been overcharged on an invoice.
So if a client says the reason for a credit balance is a credit note, the auditor would have to verify the document.
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