09 February 2011
ABC Ltd having foreign debtors outstanding as on march 2010 is Rs.5 Crores. Management is decided that this debtors is to fully written off bcause this is doubtful debts and no recoverable in future.
As a auditor what evidence we have to keep in our audit file.
10 February 2011
In case of general debtors verification, we need to verify what action company/management has taken to recover such money(i.e legal notices, court cases etc) and follow-up actions on periodic basis. We need to verify letter of guarantee can be invoked if time is not barred.The auditor need to obtain management representation in this regard. In cases of foreign debtors, permission from Authorised Dealer/RBI permission to write off such debtors.
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