Page 187 - CA Inter Audit PARAM

CA Ravi Taori
• Also, verify if the agreement is in the name of the entity and whether the expense
pertains to premises used for running business operations of the entity.
• Specific consideration should be given to escalation clause in the agreement to verify if
the rent was to be increased/ adjusted during the period under audit.

• Accounting
Verify if expense has been recorded for all 12 months and

➢ Power and fuel expense-

• Schedule
Obtain a month wise expense schedule.

• Bills
Obtain power bills and check accuracy of expense.

• Accounting
Verify if expense has been recorded for all 12 months.

• Analytical
• 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, analyze the monthly power units consumed by
linking it to units of finished goods produced and investigate reasons for variance
in monthly trends.

QNO Legal and professional expenses Old Course -- (M23M)
AIFS.56 Bhaskar CNO - AIFS-P3.120
While verifying the legal and professional expenses of the client company, what audit procedures should

the auditor perform?
Answer While verifying the legal and professional expenses of the client company, the auditor should perform the
following audit procedures.

• Obtain a month-wise and consultant-wise summary.
• In case of monthly retainership agreements, verify whether the expenditure for all 12 months has
been recorded correctly.
• For non- recurring expenses, select a sample and vouch for the attributes discussed above.
• The auditor should be cautious while vouching for legal expenses as the same may highlight a
dispute for which the entity may not have made any provision and the matter may also not have
been discussed/ highlighted to the auditor for his specific consideration.

QNO P&L (Foreign Travel Expenses) Old Course -- (SM17/SM20/SM21)
AIFS.61 Bhaskar CNO - Unique
Foreign travel expenses.
Answer ➢ Foreign Travel Expenses:
• Verify that the tour programmed was properly authorized by the competent authority.
• Check Reserve Bank of India’s permission, if necessary, for withdrawing the foreign
exchange.
• See that the tour report accompanies the T.A. bill. The tour report will show the purpose of
the tour. Satisfy that the purpose of the tour as shown by the tour report conforms to the
authorization for the tour.
• Examine Travelling Allowance bills submitted by the employees stating the details of tour,
details of expenses, etc.
• For a company, the amount of foreign exchange spent is to be disclosed separately in the
accounts as per requirement of Schedule III to the Companies Act, 2013 and Accounting
Standard 11 “The Effects of Changes in Foreign Exchange Rates”.

www.auditguru.in 5.33