Revenue & Debt
Debtor Impairment Provision Adequacy
Sufficiency of the expected-credit-loss provision against the gross debtors book by ageing.
Why impairment adequacy is tested
The expected-credit-loss provision against the gross debtors book determines how much of the recognised revenue is realistically collectable, and an inadequate provision overstates assets and the surplus. GRAP and the underlying GRAP 104 expected-credit-loss model require provisions that reflect genuine recoverability by ageing, a frequent area of AGSA challenge. AuditPro Core tests provision adequacy against the gross book by ageing so the net debtors figure reflects what will actually be collected.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Gross Debtors
R 1.28 bn
Provision Raised
R 742 m
58% of book
Modelled ECL
R 824 m
64.4%
Under-Provision
R 82 m
adjustment risk
Provision vs modelled ECL by band (R m)
Impairment adequacy by band
| Ageing Band | Gross (R m) | Provided (R m) | Shortfall (R m) |
|---|---|---|---|
| 91-365 days | 318 | 248 | 38 |
| Over 1 year | 462 | 418 | 28 |
| 31-90 days | 126 | 64 | 14 |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Provisioning reflects recoverability
Impairment writes the debtors book down to the amount expected to be collected. An under-provision flatters both the balance sheet and the reported surplus.
Ageing drives the model
Older debt is statistically less collectable, so expected-credit-loss rates rise with each ageing band. A provision that ignores the ageing profile is unlikely to be defensible.
Consistency and evidence
The provision methodology must be applied consistently and supported by actual collection history. Sudden, unexplained changes in provisioning attract audit scrutiny and possible restatement.
How AuditPro Core Bridges the Gap
- Adequacy testing: the provision is tested against the gross book by ageing band.
- Loss-rate modelling: expected-credit-loss rates are applied per ageing tier from collection history.
- Shortfall flagging: under-provisioning relative to the recoverability profile is raised for adjustment.
- Audit-ready basis: the methodology and inputs export with full traceability for AGSA review.
Key Takeaways
- Impairment reduces debtors to the realistically collectable amount.
- Loss rates must rise with each ageing band under GRAP 104.
- Under-provisioning overstates both assets and the surplus.
- Provision methodology must be consistent and evidence-based.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.