[Illustrative Checklist] for Verification of Debtors and Loans & Advances to be followed by the Auditor
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 18 May, 2023
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In the process of auditing debtors, loans, and advances, the auditor’s objective is to obtain reasonable assurance by employing appropriate procedures to corroborate the management’s assertions. The audit focuses on key assertions, including the existence, completeness, valuation, and disclosure of these financial elements. To verify the accuracy and reliability of debtors, the auditor utilizes various procedures, such as examining records, employing direct confirmation procedures (also known as circularization procedures), and conducting analytical review procedures. The nature, timing, and extent of these audit procedures depend on the auditor’s professional judgment. This article presents a comprehensive checklist for conducting an effective audit of debtors, loans, and advances, ensuring adherence to recognized accounting policies, practices, and statutory requirements for disclosure and classification. By following this checklist, auditors can obtain sufficient and appropriate audit evidence to support their opinions on the financial information.
I. Whether the auditor has carried out an examination of the relevant records to satisfy themselves about the validity, accuracy, and recoverability of the debtor balances
II. Has the auditor checked the agreement of balances as shown in the schedules of debtors with those in the ledger accounts
III. Has the auditor checked the agreement of the total debtor balances with the related control accounts and any difference has been examined by the auditor carefully
IV. Can the auditor find greater documentary evidence, such as loan and security documents and related correspondence, on which they can place reliance, in the case of loans and advances
V. Is the auditor examining whether the entity is empowered to make loans in the case of loans and advances
VI. Are the internal regulations of the entity, which prescribe the procedure for making loans, being reviewed by the auditor
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