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Steps Involved in Conducting an Internal Audit in Accounts Receivable

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What are accounts receivable?

The sales that have been made by the company but hasn’t receive money from them are referred to as accounts receivables. When the customers promise to pay in 30 days, the amount is mentioned in the category of account receivables. If the company becomes unable to collect the accounts from the debtors, the amount becomes bad debt and is placed in that category.

The receivables accounts are very important because they have an impact on the cash flow of the company. There is a separate category of this term because it helps the company in the prevention of the misappropriation of the data.

Internal Audit in Accounts Receivable

While performing the audit on the accounts receivables, it should be made sure that all the obligations present in the data are authentic. Furthermore, the data should also reflect the amounts that have been entered in the balance sheet of the company. The main task of the auditors is to verify whether the bad debts mentioned in the sheets are blatant and not overstated.

All the data should be entered on the basis of facts and accuracy. If anything comes out to be wrong, the company might find itself in trouble. During the internal audit in accounts receivables, the data skimming and embezzlement is also tested

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Accounts validation

Auditors in UAE must confirm that the data is maintained by the company properly without any problem. he must compare the data present in the files with the transactions of the accounts. After that, the auditors are to prepare a confirmation letter which is then to be sent to the customers for validation. They can also ask the company for invoice numbers as well to track the data appropriately.

Billing and Alterations

As Farahat and co define the professional from the auditing firms in Dubai, Abu Dhabi, UAE check the invoices and then determine whether the invoices are reflecting the authorized prices or not. They make sure that the period of invoices has been recorded properly by the company. They perform the verification process for the returned goods and check whether all the operations are being carried out as per the company policy or not.

Internal Controls

The auditors make sure to verify all the segregated duties so that they may check whether the credit memos are handled properly or not. They check the billing system of the company and how the data is maintained. They identify the problem areas of the internal functions of the company.  Also, they confirm the company policies for bad debts and how to follow them. They ensure if the company operations have been supervised properly or not.

This is not all. There are much more than these auditors in Dubai do. So, make sure that you keep your accounts receivables up to date and review them on a monthly basis in order to avoid any problem. Also, make sure to reconcile all your accounts receivables as well as ledgers monthly.

 
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