Write short note on Receipts from Debtors, Bills Receivables and Payments to Creditors.

Receipts from Debtors

Before vouching the receipts from debtors, the auditor should examine, the efficiency and adequacy of the system of internal check and should see that:

• The person maintaining the debtors, ledger should may be allowed to collect money from debtors.
• Customer’s should be asked to make the payment by check.

Examine the counterfoils of Receipts: Cash received from debtors should be vouched with reference to the counterfoils of the receipts issued to them. Receipts should be countersigned by a responsible official.

Compare the entries in the cash both with those made in debtors personal accounts.

Compare the date of receipt with the date of entry in the cash book.

Cash discount, if any, allowed should be properly authorized.

Confirmation: The auditor can confirm the balance from the debtors.

Payment terms: the auditor must ensure that payments and interest on late payment are being received from debtor as per terms of agreement entered into with them.

Bills Receivables

 Bills Receivable book should be compared with cash book and the pass book (or Statement of Accounts) to see that the amount on bills have been received on due dates. Where payments of Bills are received on due date, the receipts issued for the same should also be checked.

Inquiries should be made regarding the bills matured but the amount has not been received for them. Such bills might have been dishonored or retired.

If bills receivables are dishonored, they should be checked with dishonored bills physically.

If B/Rs have been discounted, the amount received and discount should be checked with the pass book.

If bills are discounted and still are not matured, they should be shown in the Balance sheet as ‘contingent liability.

Payment to Creditors:

While vouching payment to creditors, the auditor should take the following steps:

1. The auditor should see that purchases are duly authorized.
2. The auditor should vouch the entry with the receipts issued by the concerned creditors.
3. Closing balances of creditors should be checked with the creditors schedule and their ledger accounts.
4. Pass book or statement of account should be compared with the creditors accounts, receipts issued by them and the counterfoil of cheque book to be sure that payments have actually been made.
5. Before passing an entry to be correct, he should refer to minutes, contracts and other documentary evidence in support of it.