Page 186 - CA Inter Audit PARAM

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QNO P&L (Expenses Audit- Other Attributes) Old Course -- (N18E/N21M/N22E)
AIFS.53 Bhaskar CNO - AIFS-P3.120 New Course – (J25M)
While the auditor may choose to analyse the monthly trends for 5 expenses like rent, power and fuel but
for other expenses, an auditor generally prefers to verify other attributes.” Mention those attributes.
OR
M/s SS & Associates have been appointed as statutory auditors of Green Limited, a company engaged in
the business of manufacturing of hardware products. They are analyzing the monthly trends for other
expenses like rent, power and fuel, repairs, etc. and are also verifying attributes of such types of expenses.
List down the attributes for verifying such expenses.
Answer ➢ Attributes for verifying other expenses like Power and Fuel, Repair etc.:
An entity in addition to making purchases and incurring employee benefit expenses, also incurs
other expenditures like rent, power and fuel, repairs and maintenance, insurance, travelling,
miscellaneous expenses etc., that are essential and incidental to running of business operations.

• Analytical Procedures
While the auditor may choose to analyse the monthly trends for expenses like rent, power and
fuel, an auditor generally prefers to vouch for other expenses to verify following attributes:
• Test Of Details
o Whether the expenditure was authorized as per the delegation of authority matrix
o Whether the expenditure had a valid supporting like travel tickets, insurance policy,
third party invoice etc.;
o Whether the expenditure pertained to current period under audit;
o Whether the expenditure qualified as a revenue and not capital expenditure;
o Whether the expenditure has been classified under the correct expense head;
o Whether the expenditure was in relation to the entity’s business and not a personal
expenditure.

QNO P&L (Expenses Audit- Trend Analysis) Old Course -- (N21M)
AIFS.54 Bhaskar CNO - AIFS-P3.120
The auditor may choose to analyse the monthly trend for Power & Fuel expense. Explain how this analysis

will be performed by the auditor
Answer Power and fuel expense –
• Obtain a month wise expense schedule along with the power bills.
• Verify if expense has been recorded for all 12 months.
• Also, compile a month wise summary of power units consumed and the applicable rate and check the
arithmetical accuracy of the bill raised on monthly basis.
• In relation to the units consumed, analyse the monthly power units consumed by linking it to units of
finished goods produced and investigate reasons for variance in monthly trends.

QNO P&L (Rent and Fuel expenses)- Old Course -- (M19R/N22M/N22E)
AIFS.55 Bhaskar CNO - AIFS-P3.120
M/s SS & Associates have been appointed as statutory auditors of Green Limited, a company engaged in
the business of manufacturing of hardware products. They are analyzing the monthly trends for other
expenses like rent, power and fuel, repairs, etc. and are also verifying attributes of such types of expenses.
List down the attributes for verifying such expenses.

OR
Explain the audit procedure to vouch/verify:
(i) Rent expenses
(ii) Power and Fuel expenses
Answer ➢ Rent expense-
• Schedule

Obtain a month wise expense schedule along with the rent agreements.
• Agreement
• Obtain Rent Agreement
• Whether the rent amount is as per the underlying agreement.
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