Day: December 29, 2021

Verification of liabilities may be carried out by employing the following procedures:  examination of records;  direct confirmation procedure;  examination of disclosure;  analytical review procedures, obtaining management representations. The nature, timing and extent of substantive procedures to be performed is, however, Read More …

General Considerations Liabilities are the financial obligations of an enterprise other than owners’ funds. Liabilities include loans and borrowings, trade creditors and other current liabilities, deferred payment credits, instalments, payable under hire purchase agreements, and provisions. Besides liabilities, this Guidance Read More …

This refers to expenditure essentially of a revenue nature which, instead of being charged off as and when it is incurred, is accumulated in an account appropriately headed to indicate its nature and the balance in the account is written Read More …

In a Balance Sheet all the under mentioned cash balance are included under the above head :  cash balance in hand; petty cash balance in hand; balances of stamps in hand; cash in transit;  cash at branches; and  cash with Read More …

These should be verified by reference to bank reconciliation statement, and the balance certificates received from banks. If a Bank Reconciliation statement includes a large number of uncleared items as on the date of the Balance Sheet, the auditor should Read More …

In general the procedure outlined in regard to debtors is also applicable in the case of loans (and advances). Apart from verification of the balances of loans, the auditor should inspect loan agreements and acknowledgements of parties in respect of Read More …

These include amounts recoverable either in cash or in kind for value to be received, e.g., rates, taxes and insurance. The auditor should obtain a list of all advances and compare them with balances in the ledger. He should ascertain Read More …

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 Read More …

Because of the close relationship existing between a holding and subsidiary company, it is necessary for an auditor to find out that the debts shown as outstanding from the subsidiary are genuine and have resulted from transactions entered into in Read More …

(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. Read More …