Bills Receivable

If possible, the auditor should attend on the last day of the accounting period to inspect the bills in hand and agree their total with the balance in the Bills Receivable Account. If verification is postponed till some time after the existence of the bills which had matured in between the two dates should be verified
with the entries in respect of cash collected for them. If some bills were discounted after the date of the Balance Sheet, the collection of their proceeds should be verified. If any bills were dishonored after the date of the Balance Sheet, the auditor should ascertain what portion, if any, of the amount will not be recovered and ensure that provision for the same has been made. Where a new bill is reported to have been taken in lieu of a bill which has matured, the auditor should inspect the bill. Where a number of bills are found to have been discounted before the close of the year the auditor should see that the
amount of the bills so discounted is shown as a contingent liability on the Balance Sheet. If some of the bills are with bankers for collection, the auditor should obtain a certificate from them. Generally, it will be the duty of the auditor to ensure that the bills were properly drawn and stamped and
that they were not dishonoured. Where some of the bills were dishonoured, the auditor should ensure that they have been noted and protested.