Audit 101 Accounts Receivable
June 1, 2008
This post is the first of a series on how to pass an audit of your book publishing firm with flying colors.
1. Accounts Receivable
When an outside auditor looks at your book publihsing trade A/R (accounts due from customers) they are likely looking for several things;
a. Are your A/R properly classified. Accounts with a credit balance (i.e. they have a credit balance, most likely for returned books) should be classified as a liability not an asset.
b. Do you resonably expect to collect on the amounts listed within one year?
c. Is your allowance for doubtful accounts a realisitc and supportable number?
d. Is your allowance for future returns a realistic and supportable number?
e. Have you reconciled the A/R balances of your major accounts?
