You are a senior member of the mada team at Grain Millers Lad, a company whow business
Question:
You are a senior member of the mada team at Grain Millers Lad, a company whow business is milling maire, wheat and other products for local consumption The annual turnover for the year ended 30 September 2002 amounted to Sh. 1.5 million and most of its sales were on credit.
The audit team leader has assigned you the audit of the provision for bad and doubtful debts which has been set at Sh 4.75 million, out of which Kshs 3.25 million relates to the provision against specific bad and doubtful debts and the balance of Sh 1.5 million is a general provision determined as a percentage of overdue debtors with a higher
percentage being applied against the longest overdue accounts:
Required:
i. Outline the audit procedure you would apply in venfying the general provision for bad and doubtful debts
(10 marks)
ii. Explain how you would verify the specific provision for bad and doubtful debts (3 marks)