Audit Working Program - Loans Payable

NAME OF AGENCY
AUDIT PROGRAM
FOR THE PERIOD ________________
LOANS PAYABLE - Domestic/Foreign

( Account Code 444 / 445 )
Account Description: This account is used to record long-term indebtedness from

loans obtained in cash or in kind from domestic or foreign creditors which is
evidenced by a contract or agreement.
Audit Objectives:
1. To determine whether all loans payables reported as of balance sheet date are
existing legitimate obligations from long term loans or financing obtained by the
auditee and (a) all recorded additions (credits) to the Loans Payable account
during the period under audit actually represent the incurrence of obligations for
the receipt of the proceeds of long term financing/loans; and (b) all deductions
(debits) to during the period under audit actually represent the retirement or
payment of earlier recorded loans.
2. To determine whether a) the loans payable balance include all the outstanding
loans as of balance sheet date; b) all loans obtained during the period under audit
are recorded and; c) all loans paid or terminated during the period under audit
have been completely recorded.
3. To ascertain whether: a) all Loans payables are duly authorized;

and b) adequate compliance with the terms of the contracts (MOA) relative to the
loans.
4. To ascertain whether existing Loans Payable are properly recorded and shown in
the Balance Sheet in conformity with GAAP, NGAS and accounting standards set
by the Philippine ASC and to determine whether the required disclosures for long
term Loans Payable have been made in the Notes to FS.
Assertions: Completeness ( C ), Existence or Occurrence ( EO ), Validity/Legality or

Regularity ( VR ), Rights and Obligations ( RO )
ASSERTIONFS
TIME
AUDIT FRAME
TO
WP
PROCEDURES Ref
BE
DONE REMARKS
BY DATE DATE
STARTED COMPLETED
1.1 Check agreement of the balance of C

the account as reported in the balance EO
sheet with the amount recorded in the
General Ledger from Loans Payable.
C
1.2 Check whether the beginning balance EO
in this account’s GL is the ending
balance in the immediately preceding
period’s audited balance sheet.
1.3 Trace all recorded additions in the C

General Ledger for Loans Payable to EO
the Report of Collections and
Deposits or to the General Journal
and the corresponding JEV or to the
bank credit memo advising of the
receipt by the bank of the proceeds of
the loan, which ever is applicable.
1.4 Likewise, trace all debits during the C

period under audit to the Report of EO
Checks Issued or to the General
Journal and the corresponding JEV.
1.5 Verify payments of loans after C

Balance Sheet date and the recording EO
thereof.
1.6 Confirm a reasonable percentage of C

outstanding loans payables with EO
creditors to strengthen conclusions on
validity and existence.
1.7 Reconcile amounts due and C

outstanding in the books from the EO
billing statements of the creditors. RO
ASSERTIONFS
TIME
AUDIT FRAME
TO
WP
PROCEDURES Ref
BE
DONE REMARKS
BY DATE DATE
STARTED COMPLETED
1.8 Examine/vouch using an appropriate C

sampling methodology, whenever EO
applicable, the source documents RO
which are the basis for the
credits/additions as well as the for the
debits/deductions to this account, to
ensure that the events/transactions
which they represent occurred within
the correct period under audit, and
that the credits represent valid loans
obtained by the auditee, while the
debits represent valid retirement or
payments of the recorded loans.
1.9 Document exceptions found

respecting credits or debits to the C
account which represent transactions VM
or events not belonging to the period
under audit, or which do not represent
valid loans.
2.1 Obtain or prepare schedule of all loans C

outstanding indicating information as
to creditor, amount of loan, proceeds
of the loan, date obtained, maturity
date, amortization or payment
scheme, interest rate, if any and
guarantor, if any.
2.2 Foot schedule if obtained from the C

client and compare total with the
General Ledger balance for Loans
payable.
2.3 Trace details of the loans in the C

Schedule to their individual
subsidiary ledgers.
2.4 Interview pertinent Treasury or Finance C

personnel to determine if there are EO
unrecorded loans payable.
ASSERTIONFS
TIME
AUDIT FRAME
TO
WP
PROCEDURES Ref
BE
DONE REMARKS
BY DATE DATE
STARTED COMPLETED
3.1 Secure copy of loan documents and VR

examine them to determine the
following:
a.Authorization in the incurrence of

such loans;
b. Compliance with the terms and
conditions of the Loan Contract;
c.Compliance with the pertinent laws,
rules and regulations.
3.2 Trace the proceeds of the loans to the EO

cashbooks or bank accounts to RO
ascertain propriety of recording and
safe-keeping.
4.1 Check whether the current portion of VM

loans payable maturing within the PD
current year are shown separately
under Current Liabilities from the
long-term portion thereof shown
under Long-term Debt.
4.2 Determine whether the following

matters have been disclosed relative
to the long term portion of Loans PD
Payable:
 Interest rates;
 Amount;
 Number of periodic installments
and maturity dates;
 Nature and amount or extent of
assets pledged against the debt, if
any, such as (a) restrictive
covenants such as those affecting
retained earnings, or (b) working
capital requirements; and (c) any
default in principal payments,
interest, or other requirements of
the loan agreement.
ASSERTIONFS
TIME
AUDIT FRAME
TO
WP
PROCEDURES Ref
BE
DONE REMARKS
BY DATE DATE
STARTED COMPLETED
4.3 Inquire from management re: the PD

existence of undisclosed
commitments or contingent liabilities.
4.4 Take note of deficiencies, if any.

Prepare and issue AOM.
PREPARED BY : REVIEWED BY : APPROVED BY :
Date Date Date

Audit Working Program - Loans Payable

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NAME OF AGENCY

LOANS PAYABLE - Domestic/Foreign

Account Description: This account is used to record long-term indebtedness from

3. To ascertain whether: a) all Loans payables are duly authorized;

Assertions: Completeness ( C ), Existence or Occurrence ( EO ), Validity/Legality or

1.1 Check agreement of the balance of C

1.3 Trace all recorded additions in the C

1.4 Likewise, trace all debits during the C

1.5 Verify payments of loans after C

1.6 Confirm a reasonable percentage of C

1.7 Reconcile amounts due and C

1.8 Examine/vouch using an appropriate C

1.9 Document exceptions found

2.1 Obtain or prepare schedule of all loans C

2.2 Foot schedule if obtained from the C

2.3 Trace details of the loans in the C

2.4 Interview pertinent Treasury or Finance C

3.1 Secure copy of loan documents and VR

a.Authorization in the incurrence of

3.2 Trace the proceeds of the loans to the EO

4.1 Check whether the current portion of VM

4.2 Determine whether the following

4.3 Inquire from management re: the PD

4.4 Take note of deficiencies, if any.

PREPARED BY : REVIEWED BY : APPROVED BY :

Date Date Date

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