Trade receivables attract attention because collectability and cut-off errors show up quickly in the income statement. An evidence pack that merely reprints the aged listing rarely satisfies a reviewer.
Core contents
- Aged listing reconciled to the lead schedule and general ledger
- External confirmations for selected balances, with exceptions investigated
- Subsequent receipt evidence for items not confirmed
- Credit-note and returns analysis around the reporting date
- Related-party receivable identification and supporting agreements
Confirmation logistics
Send requests early. In Hong Kong trading companies, major customers may sit in different time zones; follow-up calls matter as much as the first letter. Keep a log of send dates, reminders, and alternative procedures when replies never arrive.
Subsequent receipts
Bank remittance advice should identify the invoice. A lump-sum deposit without allocation forces extra work. File the receipt against the specific invoice references tested.
Mild but common failure
Teams often include every customer statement in the folder while omitting the reconciliation between the statements and the aged listing. Reviewers then cannot see how the statements support the balance claimed.