Issues for finance leases, Auditing

Issues for Finance Leases

For the leases such have been categorize as finance leases, a model uses to be checked for the following issues:

(i) Check technique used to split capital and interest

(ii) Check the technique is appropriately applied to lease payments

(iii) Check reduction which is based on the shorter of the lease term and the needful life of the asset to the lessee.

In addition 'normal' audit tests verification of the asset as for many non current assets. Whether the lease has been classified as an operating lease, then a check is required of the manner in which the rentals have been charged to the income statement.  A check should be made on the physical existence also of the asset whether at the time of the audit the lease is still in existence.

Finally regard should be made to the possibility of assets being held within leases also being shown in normal noncurrent assets in the balance sheet.  This is principally relevant to operating leases whether the existence of a physical asset at the balance sheet date have to be required to support the inclusion of the asset in the non current asset account.

Posted Date: 1/25/2013 1:54:03 AM | Location : United States

Related Discussions:- Issues for finance leases, Assignment Help, Ask Question on Issues for finance leases, Get Answer, Expert's Help, Issues for finance leases Discussions

Write discussion on Issues for finance leases
Your posts are moderated
Related Questions
Beneficial Ownership and Existence Existence Existence of buildings and Land is not hard to display. You may even be sitting in such building.  Conversely, the audito

You are the auditor of ABC Company and the audit process is almost complete. The audit report is due to be signed next week. However, the following additional information on two ma

Current Audit File The current audit file might include inter alia: a) A copy of the audited financial statements and any report prepared as a result of audit work carried out

Systems Based audit approach The basis of IAS 400, Risk Assessment and Internal Control. The term systems audit refers to the typical audit approach to medium and large comp

Limitation of Audit Evidence The quantity and quality of evidence is constrained through the following factors as: Absolute proof is not possible; Some assert

Reliance on the Work of Other Auditors The principal auditor or the primary auditor is solely responsible for the holding company's accounts. So here it is inevitable but that

Procedures When Fraud is suspected Whenever the auditor encounters situation that might indicate that there is a material mis-statement in the financial statements resultant fr

A. Board of Directors Best Buy's Board is elected by the shareholders to oversee the business and affairs of the company.  The board counsels, advises and oversees management wi

Business Risk Approach This approach requires the auditor to determine what are the very important business risks which the client faces. This line of approach both helps the c

Reference to an expert in the Auditor's Report When issuing an unmodified auditors report, the auditor should not refer to the work of the expert.  This is because such a refe