Borrowings

What are the key steps to verify borrowings during an audit under the existence category?

Review board minutes, loan agreements, leases, debentures, discharges on assets, and obtain written representations.

What should be done to ensure completeness of borrowings?

Obtain a borrowing schedule, trace closing balances to the general ledger, review subsequent transactions, and send confirmation requests to lenders.

What aspects should be checked for the valuation of borrowings?

Ensure appropriate accounting policies, agree loan balances with agreements, recompute interest, check amortization, and verify compliance with loan covenants.

What are the main disclosure requirements for long-term borrowings?

Classify as bonds, term loans, disclose security classification, interest rates and redemption details, and specify default periods.

What additional disclosures are required for borrowings?

Confirm quarterly returns with books, and disclose reconciliation summaries for discrepancies.

How should auditors confirm the existence of liabilities?

By reviewing board minutes and loan agreements, as well as verifying leases and debentures.

Why is it necessary to trace closing balances to the general ledger during an audit?

To ensure completeness and accuracy in the financial records of borrowings.

What is the importance of recomputing interest for borrowings?

To verify the accuracy of financial reporting related to loan obligations.

What should be checked regarding foreign currency loans?

Verify exchange rates and restatement computations in accordance with AS 11.

What must be ensured concerning the purpose of borrowing during an audit?

That the purpose aligns with the company's interests and compliance with statutory regulations.

When auditing, how can you ensure compliance with the Companies Act related to borrowings?

By checking compliance with Sections 180, 185, and 186 of the Companies Act.

How should the treatment of restrictive covenants in loan agreements be handled?

They must be reviewed to ensure proper disclosure in the financial statements.

What is necessary to confirm regarding related party borrowings?

Ensure compliance with AS 18 or IND AS 24.

What should be disclosed about bank liabilities?

They should accurately reflect in the financial statements.

What is a key step in verifying borrowed amounts?

Send confirmation requests to lenders and reconcile any differences.

What should be avoided in the borrowing categories to align with financial disclosures?

Disclose borrowing usage if it is not used for specified purposes.