Performing Audit Tests of Balances (In-Person and Remotely)—Part 10, Auditing Notes Payable, Long-Term Debt, Commitments and Contingencies

CPE Credit: 2 hours

Auditing procedures in this section are focused primarily on long-term obligations and agreements, various commitments and contingencies and related party relationships and transactions. While notes payable, long-term debt, and lease obligations ordinarily don’t present significant auditing issues or problems, except perhaps for loan covenant compliance, determining the existence of commitments and contingencies and related party relationships is usually more difficult. Obtaining and examining agreements, reading minutes from board and committee meetings and making inquiries of management are among the procedures necessary to verify financial statement assertions for these classifications. This section begins with a discussion of applicable accounting and auditing standards.

Topics Covered

• Auditing procedures
• Long-term obligations and agreements

Learning Objectives:

• Understand the basic procedures for auditing notes payable, long-term debt, commitments and contingencies
• Understand the affects of accounting standards on auditing procedures in these areas
• Design and prepare the most efficient documentation for these areas
• Learn how to review and update permanent file documents