While collectibility of receivables requires forecasts which could later prove to be inaccurate,typical audit procedures of the current period will ensure that extreme overstatement of net receivables is rare.

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Auditors typically perform procedures such as testing for accuracy and completeness of receivables, assessing the aging of receivables, and verifying the collectibility of high risk receivables to ensure that the net receivables balance is not overstated by a significant amount. While there is always a risk of errors or fraud, these procedures can mitigate the risk of extreme overstatement of net receivables. However, forecasting collectibility can be more uncertain and subject to error.

While Collectibility of Receivables Requires Forecasts Which Could Later Prove