Audit procedures Existence and title
i) Carry out a debtors circularisation i.e. send the debtor a circular. If they reply, then at least one can be assured they exist and whether or not they owe the company any money.
ii) Verify if there are any payments that have been received from these debtors after year end.
iii) In the absence of any contradiction, the directors‘ representations would be relied upon.
Valuation
i) I would check that the balance is made up of specific invoices relating to recent transactions and enquiring into any balances which appear to be dispute or old.
ii) Verify if there are any payments that have been received from these debtors after year end.
iii) I would discuss with management the recoverability of balances that are in dispute or appear doubtful.
iv) Seek any information that could indicate that some of the debtors might be unable to pay e.g. bankruptcy of a debtor.
Disclosure
i) Compare the method of disclosure adopted by management with what is recommended by IAS and company‘s Act e.g. is the debt shown net of any provisions if necessary. Verify that the debtors are correctly classified as current assets;
ii) Management should confirm in their representation that they have disclosed all the relevant information in relation to debtors.