Debts Requiring Special Consideration

(1) Debts due in foreign currency : In the case of debts in a foreign currency, the auditor should find out by converting the amount into home currency whether it is more or less than the amount shown as recoverable. If there is any deficiency or appreciation, it should be appropriately adjusted in the Profit
and Loss Account.
(2) Hire Purchase debts : Strictly, these are not debts since the hirer has the option of returning the goods, the auditor should, therefore, confirm that the instalments of hire money which had accrued have been realised in case there are any arrears and the article which is the subject of hire purchase is still in
the possession of the hirer, it should be necessary to set up a provision for the loss anticipated on sale of the asset or on account of non-recovery of the outstanding balance.
(3) Package and empties : If packages are returnable but the customer has not deposited any security against their return, it is possible that he may fail to return them. Against such a contingency, the auditor should ask the client to make a suitable provision.