P – VENITURI SI CHELTUIELI FINANCIARE / Financial income and expense

Done/ No/

paper ref.
Not appl.
Working
Task description

1. Agree detail listing to the general ledger (C, A)

Obtain a detailed listing by type of interest income / expense to the general ledger. Test the mathematical accuracy
of the listing. Trace account balances to the general ledger.
2. Perform substantive analytical procedures (C, A, E, CO, V)
Perform, to an extent to achieve the desired degree of assurance (depending on the natural limitations of analytical
procedures and the rigor with which we apply the test), substantive analytical procedures: (a) develop an expectation,
based on appropriate data (assess the reliability of data, considering the extent of comfort from controls); (b)
determine the variation amount or % (threshold) to be used in the investigation of differences from expectations; (c)
compute the differences between recorded amounts and the expectations; and (d) investigate variations from
expectations by seeking relevant explanations from management or appropriate corroborating evidence.
Examples of analytical procedures: multiply the average outstanding loan balance / deposit balance by the interest
rate applicable and compare the results to the interest expense / income recorded in the income statement for
reasonableness; multiply the average outstanding assets / liabilities expressed in foreign currency with the increase /
decrease in fx rates during the year and compare the result with the net fx income or expense.
3. Verify accuracy of financial income and expense (C, A, RO)
Test, to an extent based on materiality and inherent risk the accuracy of amounts included in the financial income and
expense balance by:
- For interest income and expense: (a) recomputing or applying analytical procedures to test the calculation of the
interest expense or interest income recorded for the period and (b) tracing to supporting documents (e.g. debt
agreements, bank statements);
- For investment income and dividends: (a) recomputing or applying analytical procedures to test the calculation
of the interest income and dividends recorded for the period; (b) recomputing the accuracy of discount or
premium amortization; and (c) tracing to supporting documentation (e.g. investor statements, board minutes);
- For foreign exchange income and expense: (a) recomputing or applying analytical procedures to test the
calculation of fx differences for a selection of income and expense bookings resulted from revaluations and
transactions performed during the year; (b) tracing to supporting documentation significant amounts resulted
from transactions (e.g. invoices in foreign currency, payments).
4. Verify that cut-off was properly done (CO)
Recompute accrual amounts for interest due / interest receivable as at the year end and check that the respective expense
/ income was properly booked in the correct period.
5. Test completeness of financial income and expense balances (C)
Obtain sufficient information to test completeness, for example, debt agreements, bank statements, investment
statements, board minutes, derivative contracts, etc. and verify the total of the financial income and expense balances.

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A = accuracy / C= completeness / E = existence / V= valuation/ CO = cut off / PD = presentation & disclosure / RO = rights & obligations