ACCA AA Syllabus D. Audit Evidence - Receivables - Other Evidence - Notes ^{3 / 18}

Ensure that all bad and doubtful debts are reliable

These are the substantive procedures to be used:

1. Review the company’s procedures for identifying them

2. Review aged listings of receivables balances (listen to audio)

3. Review correspondence about unpaid debts (with customer / lawyer etc)

4. Review the calculation of doubtful debts

5. Examine credit notes issued after the year-end, this may show some balances were overstated at the year-end

6. Review the replies from customers for the confirmation of balances exercise

This ensures that revenue (and therefore receivables) are properly recorded in the correct accounting period.

Sales around the year-end need to be shown in the correct year

Procedures for cut off are as follows:

• Analytical procedures looking at inventory amounts, gross margins etc are in line with expectations

• Ensure sales invoices and credit notes around the year end are shown in the correct year

• Ask for explanations about unusual control account entries around the year end

The following procedures help with this assertion:

1. Receivables ledger balances agrees to the financial statements

2. Receivables are correctly disclosed and classified