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Sir can you please give me some examples of audit test that i need to perform to gain assurance over rights & obligations of liabilities.
With liabilities, you are dealing with obligations – the obligation to pay the principal amount and, perhaps charges or interest. Evidence would be:
Inspect loan agreements: amount, terms, repayment date (for presentation: current or long term).
Obtain and inspect bank certificates showing loans, overdrafts,
Inspect invoices from suppliers and also corresponding orders and goods received notes, traced from payables account
Look for payment after year end: implies it was owed at year end.
Recalculate outstanding wages/salaries.
There’s inevitable overlap with existence, completeness and accuracy, but we have to have evidence that the amounts are obligations of the entity – like ‘owning’ the obligation.
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