The term ‘books debts’ suggests particulary amounts recoverable from customers, but in practice it is applied to a wide range of claims which a business may carry as an asset in its books. Advances or loans cannot, however, be included under this head. Verification of debtors may be carried out employing the following procedures :
- Examination of records;
- Direct confirmation procedure (also known as ‘circularisation procedure’)
- Analytical review procedures.
The nature, timing and extent of audit procedures to be performed is, however, a matter of professional judgement of the auditor.