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30 views2 pagesAudit of Advance Payments
The document outlines the audit process for advance payments, focusing on verifying compliance with financial statement rights, appropriate valuation according to IFRS, and the correct presentation of prepayments. It emphasizes the importance of internal controls and the use of questionnaires to assess the confidence level in these controls, which influences the scope of substantive testing. Key substantive tests include assessing expense applications, checking tax advances, and verifying the existence of adequate records for advance payments.
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0% found this document useful (0 votes)
30 views2 pagesAudit of Advance Payments
The document outlines the audit process for advance payments, focusing on verifying compliance with financial statement rights, appropriate valuation according to IFRS, and the correct presentation of prepayments. It emphasizes the importance of internal controls and the use of questionnaires to assess the confidence level in these controls, which influences the scope of substantive testing. Key substantive tests include assessing expense applications, checking tax advances, and verifying the existence of adequate records for advance payments.
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AUDIT OF THE
ADVANCE PAYMENTS
This resource was compiled by Professor Elvin Concepción, from the
books Kurt Panny and other authors (2007) Auditing Principles.
McGraw-Hill by and Alvin A. Arens and other authors. (2007)
Auditing: A Comprehensive Approach. Pearson Publishing.
The audit of advance payments consists of verifying the
compliance to which
disbursements and
expenditures are subject
whose application to
expenses or other accounts
of assets, liabilities or results.
The that they
objectives of pursue in the
the payments
prospective could be the
auditors can following
be summarized in points:
(Consulted: 9/9/2013). http://www.spectavit.com.co/
1. Verify that the entity freely exercises the rights presented in the
financial statements.
2. The presentation and disclosure of prepayments in the financial
statements.
3. Determine the appropriate valuation of payments in accordance
with IFRS.
4. Test the rights over them by verifying that they are in the name
of the entity.
The internal controls to be taken into account in the audit of advance
payments include verifying whether the accrued portions of advance
payments are recorded monthly, physical controls on insurance and
surety bond policies, considerations for the purposes of expenses on
the effective date of the policies, etc.
Based on the measurement of internal controls through
questionnaires that can be applied, the auditor determines whether
the confidence in internal controls is high, moderate or low, in order to
determine the scope of substantive testing.
Among the substantive tests applicable within the audit program, we
highlight the following:
1. Assess the correct application of expenses for insurance
premiums, prepaid rent, and others.
2. Check income tax advances.
3. Verify the existence of adequate records for the control of
advance payments.
4. Conduct auditing of insurance policies, verifying their validity
and premium amount.
5. Verify in a documentary manner advance payments of
importance and obtain audit satisfaction regarding proper
accounting.