Financial Audit Procedures - Equity & Liabilities

Learn audit procedures for equity and liabilities, assess misstatement risks in balances and disclosures, and apply confirmations and alternative procedures for intercompany, tax, and consultant balances.

Auditors verify accounts payable existence, completeness, and accuracy by sending confirmation letters and performing reconciliation, with alternative procedures guided by risk assessment and professional judgment.

The lecture demonstrates how auditors verify accounts receivable movements by rolling back and rolling forward confirmations, testing debit and credit details, and reconciling with supporting documentation.

Assess the accounts payable completeness by testing posting, selecting items via professional judgment or sampling, and verifying invoices, debit memos, supplier payments, and bank statement reconciliation.

audit payroll liabilities, including salary, bonuses, and vacation, using confirmations and reconciliation to verify accuracy.

Assess bank accounts and cash procedures with professional judgment, performing bank reconciliations, confirmations, and cash counts to verify existence, completeness, and accuracy for financial statements.

Learn audit procedures to test financial liabilities and interest expenses, verify balance sheet and income statement accuracy, and reconcile loans, payments, and confirmations with bank statements.

Verify covenant calculations and compliance in debt contracts, confirm presence and disclosure of covenants, assess classification of balances, and discuss potential breaches and going concern implications.

Learn how auditors verify amortized cost computations for financial instruments, performing independent calculations, reconciling instrument contracts with data, and ensuring correct classification and disclosure in financial statements.

Audit post-employment benefits liabilities by using confirmations and reconciliations, testing movements and opening/closing balances against wages and related costs, and using sample testing to assess reliability and determine adjustments.

Audit test for provision for risk and charges verifies accuracy, completeness, and valuation of provisions by obtaining confirmation letters from legal and tax advisers and testing final phase estimates.

Verify the warranty provision's accuracy, completeness, and valuation using tested assumptions and data. Obtain independent estimates and reconcile the balance sheet, adjusting the provision when necessary to reflect future liabilities.

Auditors test equity and dividends by reconciling movements with the balance sheet and validating dividends against board resolutions, dividend policy, and bank statements.

Learn intercompany reconciliation procedures in audits for equity and liabilities, testing balances for completeness, accuracy, and occurrence via confirmations and group-to-component reconciliation, including currency translation and eliminations.

Assess how auditors test discounted present value computations for financial instruments. Verify discount rate selection, underlying contracts, and amortization and journal entries to ensure accurate present value reporting.