Audit Program Long term loans and advances

Audit Program (d)        Long term loans and advances		WP Ref.:
		Prepared by:
		Date:
		Reviewed by
		Date
Client:
Period:
Subject:	Long term loans and advances

		Amount in Rs.
Account balances:
Long term loan and advances
Provision against long term loan and advances
Classes of transactions:
Interest income

S. No.	Audit Objectives	Assertions	Risk Assessment
			IR	CR	ROSM
1.	Long term loans and advances are completely and accurately recorded	CA
2.	All recorded long term loans and advances actually exist.	E
3.	Long term loans and advances are recorded at appropriate values and all bad and doubtful balances have been provided for/ written off.	V
4.	Long term loans and advances recorded are the right of the company.	R
5.	Long-term loans and advances to associated undertaking were in accordance with legal requirements.	Laws & Regulation
6.	Long term loans and advances are presented and all disclosures have been given in accordance with the Fourth Schedule of the Companies Ordinance, 1984 and relevant IASs.	OCAL RVU

S. No.	Audit Procedures	Objective	Done by	W. P. Ref.
Test of Controls
1.	Assess the reasonableness of design of system of internal control by enquiring relevant client personnel and documenting the same (if not a documented system manual has been developed by the client). A walk through test would be necessary to confirm the understanding as documented. Identify the preventive (exercised before incurrence of transactions and event) and detective (exercised after incurrence of transactions and event) controls established by management to support its assertions.	ALL
2.	Check on sample of selected transactions covering the whole period that all preventive controls are exercised on all transactions.	ALL
3.	Check that proper subsidiary records have been maintained and entries are made in the same on prompt and consistent basis and the same is reconciled with general ledger.	ALL
4.	Check on a sample of transactions that detective controls are appropriately been exercised and in case of any detection of error/ fraud, proper steps have been taken to avoid recurrence of the same.	CE
5.	For sample of disbursements made during the year: - (a)     Check approval of appropriate level of management. (b)     Check that the employee has fulfilled all formalities necessary before disbursement of loans.	EV

S. No.	Audit Procedures	Objective	Done by	W. P. Ref.
6.	Ensure that management does not override the designed controls by n              Enquiring from the designated staff person n              Remain skeptical during performing test of design and test of effective operation
7.	Document the conclusion after performing test of controls and required level of assurance from substantive procedures.	N/A
Analytical Procedures
1.	Compare current year balances and expense with last year balances and ensure that any significant variation should be properly and logically reasoned.	CEA
Test of Details
1.	Obtain a employee-wise movement schedule of principal amount of loans and advances and interest thereon and trace the opening balances from the general ledger, subsidiary records, and last year working papers. Check casting and cross casting of the schedule.	CE
2.	For disbursements made during the year check disbursements of funds with disbursement register and bank statement.	E

S. No.	Audit Procedures	Objective	Done by	W. P. Ref.
3.	For a sample of repayments made during the year: - (a)     Ensure that amount and date of repayment was accordance with repayment schedule or agreement. (b)     Check receipt of funds with receipt records and bank statement. (c)     Recovery of interest is in accordance with the policy (i.e. along with principal or after recovery of full principal, as the case may be).	EVR
4.	Circularize confirmations to selected parties. Match replies with the amounts outstanding against each party.	CER
5.	Obtain age-analysis of long-term loans and advances and perform the following:- (a)     Verify that loans have been classified in correct categories. (b)     Current maturity has been appropriately calculated and separately disclosed. (b)     Consider the value of securities available against each loan for the purpose of calculation of provision for doubtful loans and advances.	VK
6.	Check subsequent recovery of loans etc.	EV
7.	Ensure that all loans and advances to associated undertakings are granted after due compliance with legal requirements.	Laws etc.

S. No.	Audit Procedures	Objective	Done by	W. P. Ref.
8.	Ensure that none of the loans and advances are impaired or the recoverable amount of a loan or advance is not less than its carrying amount. If the carrying amount of a loan/ advance is more than its recoverable amount, then same should be reduced to recoverable amount recognising the reduction as impairment loss	V
9.	For items stuck-up for considerable period of time, inquire about its status from the management. Compute provisions if required and ask for management representations.	V
10.	Ensure that loans and advances should be measured at amortised cost using the effective interest rate method.
11.	Re-perform calculation of interest income on test basis: - (a)     Verify rate of interest from agreement/ policy. (b)     Check the number of days for which interest is to be charged.	OATE
12.	Test check loan agreement and legal documents to verify the terms and conditions of the advances	RU
13.	Ensure that closing balances as per our working paper file are in match with general ledger.	CE
14.	Determine that disclosures have been made in accordance with the requirements of Fourth Schedule to the Companies Ordinance, 1984 and the applicable IASs.	OCAL RVU