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How do you Select the debtors for circularization?

How do you Select the debtors for circularization?

Answers

Wilfred
A representative sample should be selected from the debtors listing. When selecting the sample
the following classes of accounts should receive special attention:
i. A ll large debtors would be circularized i.e. debtors above the materially level set for debtors.
ii. Credit balances would also be selected to try to confirm that they are genuine credit balances. This is because debtors system should produce debit balances and not credit balances.
iii. Debtors who seem to have exceeded their credit limits in terms of amounts or time may also be selected.
iv. Small or nil balances on accounts that are normally very active during the year would be selected to confirm that there is no window dressing.
v. Newly opened accounts also tend to be circularized. The remaining accounts tend to be selected on a random basis.
vi. Long outstanding balances. This helps in assessing the need to create a provision for irrecoverable balances.
vii. Accounts in dispute.
Wilfykil answered the question on April 12, 2019 at 06:26

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