How would you deal with this as an auditor?

Check the resonableness of it. it may be reasonable if the actual debts remains near to 2 percent. perform inquiry for it.

Management of an entity may change an accounting estimate (in this case Allowance on uncollectable accounts) according to the best of their experience and knowledge. However change in estimate should have some solid grounds.

 

Being an Auditor of the Financial Statement having a change in estimate is not a big deal. Auditor should use analytical procedures only. However, while excersing professional skepticism, Auditor may document changes in accounting estimates and reasons therin. Auditor may also highlight this fact in his Management Letter after submiting his Auditors' report. However, changes in accounting estimates will not become the basis of issuing a modified Auditors' report.

Yes, earning are always risky area by nature.. And material to income statement and receviables are material to statement of financial position. As per ISA 530 analytical procedure need to be perform on matarial amount of accounts balance and class of transactions. Detail substrative procedure always need to perform on material amounts however its also depend on assessed audit risk on particular area. So yes we have to deal these area with professional scepticism because forecast earning not equal to actual result. I hope this is enough answer and u understand well if you have audit backgroud. Thank you.

no I am did not Auditor >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

 

 

No I Don't have any concern about this change in estimate? No Reason.