• Document: Audit Program for Prepaid Expenses and Other Assets
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Form AP 20 Index Reference__________ Audit Program for Prepaid Expenses and Other Assets Legal Company Name Client: Balance Sheet Date: Instructions: The auditor should refer to the audit planning documentation to gain an understanding of the financial reporting system and the planned extent of testing for prepaid expenses and other assets. Modification to the auditing procedures listed below may be necessary in order to achieve the audit objectives. All audit work should be documented in attached working papers, with appropriate references noted in the right column below. Audit Objectives Financial Statement Assertions Existence or occurrence Balances of prepaid expenses, deferred charges, Completeness intangibles, and other assets are being allocated to Rights and obligations future periods and/or realized in the ordinary course of business. Valuation or allocation Valuation or allocation Amortization or loss in value is recorded correctly with respect to accounts, amounts, and periods. Amortization methods and periods are reasonable and systematic. Valuation or allocation Prepaid expenses, deferred charges, intangibles, and other assets with no continuing value are removed from the books in a timely manner. Presentation and disclosure Prepaid expenses, deferred charges, intangibles, and other assets are properly classified and presented in the financial statements and adequate disclosures are made with respect to amortization method and period and accumulated amortization for intangible assets. Performed Workpaper By Reference 1. If account balances for prepaid expenses, deferred charges, intangibles, and other assets are not material to the overall financial statements, limit testing to only performing analytical review procedures as follows: a. Compare current-period ending balance per the general ledger to the prior-period balance and investigate any unusual variations. b. Compare actual amounts to budgeted amounts. c. Review general ledger account activity and investigate any entries which appear unusual. 2. If prepaid insurance balance is material to the overall financial statements, perform the following procedures: a. Prepare or obtain from the client an analysis of prepaid insurance and related expense showing (1) insurance company name, (2) policy number, (3) type and amount of insurance coverage, (4) insurance coverage period, (5) premium amount, (6) monthly amortization amount, (7) prepaid insurance balance at the beginning of the period, (8) current-period payments or refunds, (9) current-period insurance expense, and (10) prepaid insurance balance at the end of the period. b. Test the arithmetical accuracy of the analysis and determine the reasonableness of the unamortized prepaid insurance balance at the end of the period. c. On a test basis, examine insurance policies in force and agree terms and coverage to detail information per the analysis. d. Consider obtaining independent confirmation of insurance coverage and terms from the insurance company or broker. e. Reconcile insurance expense per the analysis to the general ledger. Performed Workpaper By Reference f. Determine whether insurance premiums are being financed and, if so, if the related liabilities and finance costs have been recorded. g. Vouch significant premiums to premium notices. h. Determine whether all significant insurable risks have been considered. 3. If prepaid property taxes balance is material to the overall financial statements, perform the following procedures: a. Prepare or obtain from the client an analysis of prepaid property taxes and related expense showing (1) taxing authority, (2) property location and description, (3) assessed value, (4) total tax paid, (5) payment date, (6) period covered, (7) prepaid property taxes balance at the beginning of the period, (8) current-period payment, (9) current-period expense, and (10) prepaid property taxes balance at the end of the period. b. Examine tax bills

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