Develop the Audit Program – Prepaid Expenses And Ref.
:
Other Assets Page: 1/2
Client: ORION HANEL PICTURE TUBE CO LTD Audit date: 31 Dec 2002
Financial Statement Assertions
Audit Objectives: E/O C R& V/M P&D
O
All prepaid expenses on the balance sheet represent expenditures that will benefit
the succeeding period. All assets classified as other assets (e.g., deposits, deferred
charges, intangibles) on the balance sheet exist. All recorded income and expense
relating to these assets have accrued to the entity at the balance sheet date.
All expenditures that will benefit the succeeding period and that can be properly
included in prepaid expenses at the balance sheet date are included on the balance
sheet. All other assets owned by the entity are included on the balance sheet. All
income and expense accruing from these assets at the balance sheet date have
been recorded.
Prepaid expenses and other assets are included on the balance sheet at the
appropriate amounts. The related income and expense are stated on the income
statement at the appropriate amounts.
The entity is entitled, at the balance sheet date, to the future benefits related to the
prepaid expenses included on the balance sheet. The entity owns, or has a legal
right to, all other assets in this classification. All the other assets are free of liens,
pledges, or other security interests or, if not, such liens, pledges, or other security
interests are identified.
Prepaid expenses and other assets, and all related income and expense accounts,
are properly classified, described, and disclosed in the financial statements,
including notes, in conformity with prescribed accounting principles.
Assertions:
Existence or Occurrence, Completeness, Rights and Obligations, Valuation or Measurement, Presentation and Disclosure
Audit Procedures to Consider
Assertions Auditor
addressed Check if
by the item is W/P Sign-
procedure applicable Ref. Off
E, C 1. Obtain or prepare an analysis of prepaid expenses and other
assets (e.g., deposits, deferred charges, intangibles). Test the
clerical accuracy of the analysis. Compare the asset and related
expense balances with those of prior periods and investigate any
unexpected changes (or the absence of expected changes).
V 2. For accounts greater than 25%TE, recompute the ending balance
and determine that the carrying amount does not exceed amounts
properly allocable to future periods.
E, C, V 3. Confirm significant deposits and assets held by others.
E, C, V 4. If significant, confirm the cash surrender value of life insurance
policies (and related loans).
E, C, V 5. Examine invoices, contracts, agreements, or other documentation
for significant additions to these accounts.
E, C, R&O, 6. Review minutes and significant agreements for evidence of the
P&D
existence of assets in this classification, and of liens, pledges, or
Date:
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E&Y SMALL BUSINESS DOCUMENTATION Prepared by:
SB-19e (12-00) Develop the Audit Program - Prepaid Expenses and Reviewed by:
Other Assets
Develop the Audit Program – Prepaid Expenses And Ref.:
Other Assets Page: 2/2
Assertions Auditor
addressed Check if
by the item is W/P Sign-
procedure applicable Ref. Off
other security interests in these assets.
E, V 7. Review the prepaid expense and other asset accounts (including
the related income and expense accounts) in the general ledger
and investigate any unusual items.
V 8. Determine whether the carrying amounts of other assets are
appropriate (e.g., establish the recoverability of non-current
deposits and the realizable value of other assets by reference to
contracts, agreements, or other data). Evaluate the allowances for
losses on these accounts and determine whether there has been
any permanent impairment of value.
P&D 9. Determine that balances are properly classified (current vs. non-
current) and described in the financial statements.
10. Trace amounts amortized to expense during the period to the
related general ledger accounts.
11. Document the nature of suspense payment (due to immediate
holoding company) for disclosure in the financial statement.
Date:
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E&Y SMALL BUSINESS DOCUMENTATION Prepared by:
SB-19e (12-00) Develop the Audit Program - Prepaid Expenses and Reviewed by:
Other Assets
