Auditing Liabilities, Including Long-Term Debt, Risks of Completeness, Classification and Disclosure 2.5 CPE

The completeness and proper classification of liabilities are the typical higher audit risks. The complexity of the debt financing arrangements may create a significant risk requiring special audit consideration. This module will discuss tips and techniques for auditing accounts payable, accrued expenses, and common long-term financing arrangements and related debt covenants.

Major Topics:

• Typical audit procedures related to accounts payable and accrued expenses, including the search for unrecorded liabilities
• Key controls related to liabilities
• Auditing long-term debt, including compliance with covenants
• Determining the proper classification of financing arrangements
• Proper form of noncompliance waiver letters
• Impact of noncompliance on disclosures

Prerequisites

No advanced preparation or prerequisites are required for this course.
Designed For: Accountants responsible for auditing accounts payable, accrued expenses and debt.

Learning Objective

• Discover and discuss typical audit risks and special audit considerations related to various liabilities.
• Recognize and tailor the audit plan in response to assessed risk of material misstatement, focusing on the assertions with typically higher risk.
• Explore and evaluate results from a search for unrecorded liabilities and procedures to assess the propriety of accrued estimates.
• Discover and evaluate the completeness, classification, and disclosure of financing arrangements – including debt covenant compliance.

Last updated/reviewed: March 13, 2024