Examination of Disclosure

The auditor should satisfy himself that the liabilities have been disclosed properly in the financial statements. Where the relevant statute lays down any disclosure requirements in this behalf, the auditor should examine whether the same have been complied with. In some cases loans are guaranteed third parties in whose favour the assets of the entity are charged. The auditor should examine whether the disclosures concerning such loans are appropriate,
e.g., they may be classified as secured with disclosure of the fact that the assets of the entity have been charged in favour of third parties which, in turn, have given guarantees to parties from whom loans have been obtained. The auditor should recommend to the entity to disclose, in parentheses or in footnotes, the installments of term loans, if any, falling due for repayment within the next twelve months. The auditor should examine that the following have been disclosed in respect of contingent liabilities:

  1.  nature of each contingent liability;
  2.  the uncertainties which may affect the future outcome;
  3.  an estimate of the financial effect or a statement that such estimate cannot be made.
(Visited 2 times, 1 visits today)
Share this:

Written by