You are a senior member of the audit team at Grain Millers Ltd., a company
whose business is milling maize, wheat and other products for local consumption.
The annual turnover for the year ended 30 September 2002 amounted to Sh. 1.5
million and most of its sales were on credit.
The audit team leader has assigned you the audit of the provision for bad and
doubtful debts which has been set at Sh. 4.75 million; out of which Kshs 3.25
million relates to the provision against specific bad and doubtful debts and the
balance of Sh. 1.5 million is a general provision determined as a percentage of
overdue debtors with a higher percentage being applied against the longest
i. Outline the audit procedure you would apply in verifying the general provision
for bad and doubtful debts. (10 marks)
ii. Explain how you would verify the specific provision for bad and doubtful