Audit Working Papers Deferred Liabilities

Audit Working Papers Deferred Liabilities

Audit Program (c)        Deferred Liabilities		WP Ref.:
		Prepared by:
		Date:
		Reviewed by
		Date
Client:
Period:
Subject:	Deferred Liabilities

		Amount in Rs.
Account balances:
Classes of transactions:

S. No.	Audit Objectives	Assertions	Risk Assessment
			IR	CR	ROSM
	All deferred liabilities on the balance sheet represent amounts owed by the entity to tax authorities, employees or other third parties.	Existence
	The deferred liabilities represent obligations of the entity at the balance sheet date.	Rights & Obligations
	All deferred liabilities owed by the entity and all related expenses that have accrued at the balance sheet date have been recorded.	Completeness

S. No.	Audit Objectives	Assertions	Risk Assessment
			IR	CR	ROSM
	Deferred Liabilities have been included on the balance sheet at appropriate amounts.	Valuation
	To ensure that deferred liabilities have been presented, classified and disclosed in the financial statements in accordance with the requirements of applicable financial reporting framework i.e. Companies Ordinance, 1984 and applicable International Financial Reporting Standards.	Presentation & Disclosure

S. No.	Audit Procedures	Done by	W. P. Ref.
Analytical Procedures
	1.      Compare current year balances with prior year and ensure reasonableness of changes during the year.
	2.      Enquire into and obtain explanations for any unusual changes during the year.
	3.      Compare income tax expense to previous year and assess whether variance is consistent with change in profits after taking into account any changes in income tax rates.
Test of Details
1.	TEST DEFERRED LIABILITIES
	A.     Obtain a schedules of all Deferred liabilities showing beginning and ending balances , provision payments during the year, and perform the following:
	1.      To obtain assurance about the completeness of the schedule:
	1.1    Make inquiries of knowledgeable management.
	2.      Test the summarization and trace the ending balances to the general ledger.
	B.     For deferred liability regarding gratutity perform the following procedures
	1.      Obtain copy of  company’s rules and policies regarding staff gratuity.
	2.      Verify the last salaries drawn by selected employees from payroll or salary sheet.

S. No.		Audit Procedures	Done by	W. P. Ref.
		3.      Verify the date of appointment from personal files.
		4.      Check the calculation of number of years completed from date of appointment to date of the balance sheet.
		5.      Check the calculation of charge of the gratutity for the year.
		6.      Verify the payments of the gratuity to staff retired during the year from the company’s rule and bank statements.
		7.      Check other requirements as per IAS 19.
		C.     For deferred liability regarding pensions:-
		1.      Obtain a copy of company’s rules and policies regarding pension (whether funded or unfunded).
		2.      For funded pension plans, check payment of contribution of client towards fund according to the fund’s rules.
	3.      For unfunded pension plan, verify provisions for deferred liability in light of actuarial valuations.
	4.      Check other requirements as per  IAS-19 (revised).

S. No.	Audit Procedures	Done by	W. P. Ref.
	D.     For deferred liability regarding taxation:-
	1.      Calculate taxable and deductible timing differences.
	2.      Apply appropriate rate of taxation on total of reversible timing differences (as per old IAS 12. However, as per revised IAS 12, all timing differences whether reversing in the foreseeable future or not, are required to be incorporated into the accounts)          Ensure that proper amount has been taken in profit and loss account by taking difference of opening and closing balance of deferred tax liability.
	E.      Evaluate results of the tests.
2.	TEST VALUATION AND PRESENTATION
	A.     Determine that disclosures have been made in accordance with requirement of Companies Ordinance, 1984 and relevant accounting pronouncements.