Current Liabilities

Question 1

What assertion is the primary concern for current liabilities?

Answer 1

Completeness

Question 2

How do you search for unrecorded liabilities?

Answer 2

1) Review cash disbursements subsequent to the balance sheet date (inspect supporting underlying documentation for payments to determine which period it belongs)
2) Inspect open (unpaid) invoices on hand
3) Inquire of management as to any other unpaid items

Question 3

How do you inspect existence for current liabilities?

Answer 3

Low risk.

Inspect underlying documents (invoices, receiving docs) supporting the recorded payables.

Question 4

How do auditors address valuation?

Answer 4

We expect they will pay 100% of what they owe, so this is relatively low risk.

Question 5

How do auditors address rights and obligations?

Answer 5

Read documents

Inquire about related party transactions

Question 6

Which liabilities accounts would you use analytical procedures?

Answer 6

Wages payable, dividends payable, and interest payable