Audit program for deferred expenses

The auditor must pay close attention to this component of the asset, since it contains all the prepaid expenses made by the company and that in a moment can bring it a future benefit.

Audit Objectives for Deferred Expenses

A. General

Get enough evidence about:

1. That the expenses paid in advance represent benefits or services to be received or used in the next fiscal periods, for which an obligation has been contracted or funds disbursed.All transactions or balances of deferred expenses are adequately and fully recorded in the records All transactions corresponding to the deferred assets account are recorded or attributed to the appropriate period. The amounts of this account are duly calculated in accordance with the nature and terms of the transaction and the accounting standards. Which reflect all the facts and circumstances that affect its valuation in accordance with accounting standards.

B. Specific

1. Obtain certainty of the reality of the registered values ​​The accounts have been adequately summarized, classified and descriptive and all the necessary aspects have been exposed for an adequate understanding of these balances and transactions that affect the account Verify that the amortization terms that are handled during the period are appropriate and clearly reflect the reality of the company in this area.

Deferred expenses

• Interests

  Insurance

  leases

  fee

  services

  warehouses

  commissions

Audit Program

To validate the information that the company provides, with respect to the Deferred Expenses, the following audit program must be established, developing the points described below:

Substantive tests

1. Review and evaluate the strength and / or weaknesses of the Internal Control system and based on said evaluation:

• Perform compliance tests and determine the extent and timing of the applicable audit procedures according to the circumstances Prepare a memorandum or report with the result of the work, the conclusions reached and the comments on the strength and / or weaknesses of the control internal, which require immediate action or may be appropriate points for our recommendation letter.

2. Plan and carry out substantive tests of the figures shown in the financial statements and that are necessary according to the circumstances.

Compliance Testing

1. Verify that management performs periodic review of the book value and amortization period of deferred charges Determine if deferred account balances and transactions are reviewed and investigate doubtful aspects, in order to verify the veracity of balances and transactions. supports of the accounts recorded as deferred, are in order and in accordance with the legal provisions Observe if procedures are used to review the correct disbursement of expenses paid in advance, in order to check the valuation of this component Check that there is a control over office supplies and that there are policies for the proper use of these elements, as well as preventing thefts that significantly affect the company.Verify the existence of a manual of functions of the personnel in charge of the deferred positions and the safeguarding of office supplies. Like the knowledge and fulfillment of this on the part of the employees.

The deferred account is made up of expenses paid in advance which avoid disbursements of funds in future years.

Audit Procedures for Deferred Expenses

1. Prepare an analysis of deferred charges and expenses paid in advance, indicating the basis and determining the correction of the costs of accruals and cancellations.

2. Review prepaid expense entries to identify unusual or significant items.

3. Determine if it is okay for rare deferred charges to be deferred or written off.

4. Examine the entries of the insurance record in the year check them against the invoices, check the accuracy of the distributions.

5. Examine the insurance policies in force at the end of the year; write down who, what and for how much is insured and the importance of any special clause; Compare pending items with the record.

6 Check if the usual prepaid expenses have been recorded within the development of the company to verify possible omissions.

7. Review the stock of office supplies, which are in accordance with the balance recorded in books

8. Search for unregistered assets in this category:

• Examining non-annotated documents Examining documents after the balance sheet date Examining cash outflows after the closing date

9. Prepare deferred certificate.

10. Investigate old or abnormal balances and get an explanation for them

11. Investigate the existence of credit balances and reclassify them in a liability account.