Why do you think auditors are concerned that sales on account be recognized in the proper time period and that bad debts be estimated accurately?

Sales on account means the credit sales, be recognised in the period that they are sold and not  at later period when the money is received . This is basically followed to adhere the accounting concept called Accruals ( Matching ). . If the final accounts of a business are to give reliable information, the revenue and other income must be no more and no less than the business has earned in the  period covered by the Profit and Loss Account.

When the debtors accounts become bad because they are bankrupt, so, there is a clear evidence for their inability, they should be cleared from the sales ledger by transferring them by journal entry to a bad debts account.  Or in some cases, although a debt may not actually have become bad , there may be doubt as to whether it will be paid, ( because it has been outstanding over a period of time), it may turn out eventually to be a bad debt, it would be misleading to include that debt as an asset in the balance sheet pretending that the amount is not in doubt.. On the other hand , since it has not yet become bad, it would be wrong to write it off, therefore, a provision is made to cover all such doubtfull debts. 

Base on the audited reports the businesses seek source of finance for growth/expansion( bank loans/ issue of new shares/debentures etc) or even to cover any shortages in the working capital( bank over drafts). So, it is necessary for auditors to reflect the true status of the financial performane and the positions of the business which are relied by such sources of finance.