Substantive Procedures for Valuation of Trade Receivables Flashcards
Discuss with finance director…
Discuss with finance director the rationale for not increasing the allowance for trade receivables and review its overall adequacy
Obtain a breakdown…
Obtain a breakdown of opening allowance and consider if receivables provided in prior uear have been recovered to assess reasonableness of prior levels of allowances
Review aged trade receivables ledger…
Review aged trade receivables ledger to identify any slow-moving or old receivable balances and discuss the status of such balances with credit controllers
Review whether any after-date cash receipts…
Review whether there are any after-date cash receipts for slow-movjng/old receivable balances
Review customer correspondence…
Review customer correspondence with significant customer and identify what balances are unlikely to be paid
Review board minutes…
Review board minutes to identify whether there are any significant concerns in relation to payments by customers
Potential level of trade receivables…
Calculate potential level of trade receivables which aren’t recoverables and assess whether this is material or not and discuss with management
