Professional Documents
Culture Documents
Accounts Title
Accounts Title
Accounts Title
Interest Test the The auditor should obtain the interest rate Valuation; This might affect the
payable computation and recalculate the amount reported as Accuracy either there is
of interest interest payable based on the number of overstated or
payable months the obligation is outstanding understated of the
during the current year as part of this account of interest
procedure. payable.
Notes Review To determine whether a default or Presentation; It might result
payable compliance violation of any debt covenant has Disclosure overstatement or
with the occurred, the auditor should examine the understatement of the
terms of entity's compliance with terms, restrictive notes payable.
debt covenants, or other provisions of debt
agreements agreements. If any debt covenant has
been violated or defaulted on, the auditor
should make sure that it is properly
disclosed in the notes and that the item is
appropriately presented as a current
liability in the statement of financial
position.
Warranties Evaluate the a. The auditor should normally Valuation; The disclosure and
reasonableness of take into account the entity's Allocation reasonable of the
accounting estimates historical experience in making accounting estimate
made by past estimates, as well as the will not become
management. auditor's own industry appropriate.
experience. The auditor should
obtain an understanding of how
management developed the
estimate by reviewing and
testing the process used by
management to develop the
estimate and develop an
independent expectation of the
estimate to corroborate the
reasonableness of management's
estimate.