You are a Senior Audit Manager at IT$4$U Limited $($IT$4$U$),$ an information technology company. IT$4$U has a $31$ August $2024$ financial year$-$end. IT$4$U was founded by Gerard Blank in $2001,$ and he is currently the Chief Executive Officer. IT$4$U has a head office in Johannesburg and provides consulting and software development services to clients in the United Kingdom $($UK$).$ Revenue IT$4$U enters contracts with UK clients and develops software for each client based on specific software requirements requested by the client, which is unique to the client. These contracts entered with the UK clients are Pound$-$denominated. The revenue for software development and implementation of the software is based on when milestones are completed; for example, it can take between three to six months to develop and implement software. There are clients who pay for the entire project upfront, but the majority of the customers have credit terms due to the expensive nature of developing and implementing software. Credit sales to customers are made based on an approved customer list. Often, staff from IT$4$U will travel to the clients in the UK and incur travel costs. $70\%$ of the revenue is for software development and implementation, and the remaining $30\%$ of the revenue is for consultation services. The contract must have the following features in order to be binding and final: $$ Name and surname of the person or name of the company in the UK$.$ The details of the person responsible for making the payment. $$ A contract number, which consists of the first three letters of the customer name$/$company name and three numbers relating to the unique project ID number, for example, THA$015.$ Each contract number is unique to a specific contract. $$ Date of the commencement of the project. $$ Duration of the project. $$ The rates for each milestone of the project. These rates are approved by the board of directors. $$ Administrative fees relating to the project. $$ The travel fees to meet with the customer, which are invoiced to the customer as a reimbursement. The travel fees are approved by the board of directors and recognised as other income. $$ Total fees to be paid by the customer, including the rates, travel and administrative fees. $$ Deposit to be paid, which is $40\%$ of the total fees. $$ A discount of $10\%$ is awarded to customers who pay the fees upfront. $$ Interest of $10\%$ per annum is charged if the fees are outstanding for more than $30$ days after the completion and implementation of the software. $$ Delivery date is the date of completion and implementation of the software. Allowance for credit losses IT$4$U has a material amount related to trade receivables in the statement of financial position. It is policy for IT$4$U to have an allowance for credit losses of $25\%$ of total trade receivables, which is consistent with prior years; in addition, bad debts are usually written off after $90$ days. IT$4$U maintains a record of all trade debtors who should be written off. IT$4$U uses a company called Bad Debts Recovery $($Pty$)$ Ltd for debt recovery services. Bad Debts Recovery $($Pty$)$ Ltd assists with the recovery of all trade debtors who are considered doubtful and customers who have open disputes with IT$4$U$.$ REQUIRED: $1\mathrm{.}1$ Formulate the substantive procedures that you would carry out on the allowance for credit losses.