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Form AP 55

Index Reference__________
Audit Program for Accrued Liabilities
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 accrued liabilities. 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
Accrued liabilities reflected in the balance sheet
include costs and expenses authorized, incurred, and
for which benefit has been received as of the balancesheet date.
The basis and method of accrual are reasonable and
consistent with the prior period.
Accrued liabilities are properly classified in the
balance sheet and adequate disclosures made in
accordance with IAS.

Financial Statement
Existence or occurrence
Rights and obligations
Valuation or allocation
Presentation and disclosure

1. Perform analytical review procedures as follows:
a. Compare current-period liability amounts to priorperiod balances and investigate unusual fluctuations.
b. Compare actual amounts to budgeted amounts.


Review general ledger account activity and investigate any entries that appear unusual. Workpaper Reference . perform the following procedures: a. Compare amounts accrued as of the balance-sheet date to subsequent payments made. perform the following: a. Review compensation agreements for potential additional liabilities. On a test basis. amount and timing of benefits that the employee will receive. If the accumulated but unused annual leave is material to the overall financial statements. d. Compare wages and payroll taxes per the payroll tax returns to the general ledger. c. b. Obtain from the client and review a copy of the agreement that specifies the nature. 2. Perform the following procedures regarding accrued payroll: a. or other supporting documentation (e. 3.) is material to the overall financial statements.. vehicles. 4. personnel manuals. union contracts) to determine the related policies. b. recompute the client’s calculation of accumulated but unused annual leave and determine overall reasonableness of the accrual recorded as of the balance-sheet date.Performed By c. b. On a test basis.g. Examine client policy. recompute the client’s calculation of other benefits owed to employees and determine the overall reasonableness of the accrual recorded as of the balance sheet date. etc. If amounts owed to employees for other benefits (use of flats. Trace amounts accrued in payroll records as of the balance-sheet date to amounts recorded in the general ledger.

Recompute the client’s calculation of income tax currently payable. additions and reductions) by examining supporting documents or by applying analytical procedures to related revenue and expense accounts. Obtain or prepare a schedule calculating the tax provision for the year (income taxes currently payable + required adjustments to the deferred tax account) in accordance with IAS 12. perform the following procedures: a. Obtain or prepare a schedule reconciling pretax accounting income to taxable income. Determine if the deferred credit balance at the balancesheet date is reasonable. d. 6. Perform the following procedures regarding income taxes payable: a. Test computations of the current year activity (i. identifying separately: • Permanent differences • Timing differences originating and/or reversing during the year. 7. Determine if the method of amortization is consistent with the prior year.e. b.Performed By 5. b. Obtain an understanding of the nature of the account and the client’s policy and method of accounting. For liabilities denominated in a foreign currency. Confirm current tax payable with the tax office. verify that related Mongolian taxes (required to be paid when a Workpaper Reference . c. c. using the current tax rate times the amount of taxable income determined in the schedule obtained in step (a) and compare to the client’s tax statement. If deferred income and other deferred credits are material to the overall financial statements..

Analyze historical trends in accruals and related expense accounts. perform the following: (1) Observe payroll distributions. Search for large or abnormal year-end adjustments. c. duplicate addresses. audit procedures such as the following should be considered in addition to the ones listed above: a. unusual number of hours worked. unusual pay rates. Workpaper Reference . (4) Test payroll calculations and deductions. If the auditor is concerned about the risk of fraud. For payroll. for two different people. (2) Scrutinize payroll records for employees with little or no deductions from their payroll. d. (7) Scrutinize the payroll registers for unusual items such as: names of former employees. Perform detail analyses of expense accruals and trace and vouch activity in the account. (6) Examine payroll disbursements subsequent to year-end and compare with accrued payroll at the balance-sheet date. duplicate names. b. (3) Review personnel files for compensation rates. e.Performed By liability is settled in a foreign currency) have also been accrued. (5) Confirm amounts paid to employees who are at remote locations working without direct supervision. 8. Confirm accrued liabilities with outside third parties.

c. Based on the results of the search for unrecorded liabilities. Review the client’s calculation of the accrual and determine the reasonableness of basis. and amount of accrual. it is my opinion that the objectives listed in this audit program have been achieved. Reconcile amounts accrued in the current period to the related expense general ledger control account. perform the following: a. Based on the procedures performed and the results obtained. method. If other accrued liabilities are material to the overall financial statements. Compare accrual amount to payments made subsequent to the balance-sheet date. for reasonableness. b. if applicable.Performed By 10. determine if any additional accruals should be made as of the balance-sheet date. Performed by Date Reviewed and approved by Date Conclusions: Comments: Workpaper Reference . 11.