Page 162 - CA Inter Audit PARAM

CA Ravi Taori
• Loans repayable on demand;
▪ from banks.
▪ from other parties.
• Loans and advances from related parties;
• Deposits;
• Other loans and advances (specify nature).

➢ Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be
specified separately in each case.
➢ Inhere loans have been guaranteed by directors or others, the aggregate amount of such loans under
each head shall be disclosed.
➢ Period and amount of default as on the balance sheet date in repayment of loans and interest, shall
be specified separately in each case.
➢ current maturities of Long term borrowings shall be disclosed separately.

Case discussion & conclusion
It shall be shown under the head “Borrowings” and classified as Short-term secured borrowings specifying
nature of security. The above said outstanding amount shall be further sub-classified under heading “Loans
repayable on Demand” from Banks. As per requirements of Schedule III of Companies Act, 2013, where
loans have been guaranteed by directors or others, aggregate amount of such loans under each head shall
be disclosed.

QNO B/S (Trade Payable Existence)- Old Course – (N18M)
AIFS.29 Bhaskar CNO - AIFS-P1.120
Liabilities include trade payables and other current liabilities, deferred payment credits and provisions.
Verification of liabilities is as important as that of assets, considering if any liability is omitted (or
understated) or overstated, the Balance Sheet would not show a true and fair view of the state of affairs of
the entity. Advise clearly stating the audit procedure to establish the existence of trade payables and other
current liabilities as at the period-end.
Answer ➢ Existence
(Controls & Totals)

➢ Test of controls
Check whether there are controls in place to ensure that the same purchase/ expense invoice
cannot be recorded more than once, and payable balances are automatically recorded in the
general ledger at the time of recording of expense

➢ Test of Details
To ensure that trade payable ledger reconciles to general ledger, ask for a period-end accounts
payable aging report and trace the grand total to the amount in the accounts payable account in
the general ledger.
Calculate the accounts payable report total. Add up the expense/liability items on the accounts
payable aging report to verify that the total traced to the general ledger is correct.
Investigate reconciling items.
If there are journal entries in the accounts payable account in the general ledger, review the
justification for larger amounts. This implies that these journal entries should be fully documented.
Author’s Note

• Key Points for quick recollection
Check controls in place -- trade payable ledger reconciles to general ledger & ask for accounts
payable aging report-- Calculate the accounts payable report total -- Investigate reconciling items.

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