Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Accounts reconcilliation of debtors

Tahseen Tabassum (CA-FINAL) (644 Points)

25 April 2009

While going through the Accounts Receivables we found that the company is not preparing the reconcilliation statement of the AR neither the co. is maintaining any written documents for the balances standing in the books from which we can confirm the balance.Particular ledger by the name of customer was also not prepared the ledger was as per job no. so it was difficult to confirm the balance of the particular AR...What action as an Internal Auditor shall we take.

Reply
Follow
Share

3 Replies

Vrnanda (auditor) (110 Points)
Replied 25 April 2009

Hi Tabassum,

Your question seems to be unique.

It is strange to listen to that, I dont know which accounting package they are using. I dont know whether you creating/imagining the situation. Any way my suggestion would be as follows:

First can you just satisfy yourself that "How the payments were received from the customers" is there any track for the same.

There are few possibilites which are as follows:

1) If there is a track of the receipts vide job order no, and party number (let us say Mr. X made the payment to the company for the job order no. XX, and the same is adjusted to Mr. X in the Job order no. XX), then take the Job account balances as at the end of the period for which you are doing the internal audit, consolidate all the ledgers having a column for the job no, then make a pivot requiring Name of the party and amount outstanding. This will give you the list of the parties and amount due as at a particular date.

2) If there is no track, take opening job ledgers, and jobs done during the period, also take the receipt ledger, make pivot for the parties and amounts for all opening, transactions and receipts. Then using vlookup function "Opening + Jobs done - receipts" will be your closing cutomer balances that you need to confirm.

3) But do not forget to qualify your internal audit report stating that there is no tracking of the customer balances visavis customer vise, and also do not forget to suggest the company to maintain such summaries.