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Audit of Expense Accounts

In: Business and Management

Submitted By Oddreader
Words 250
Pages 1

An audit program applicable to the majority of expenses is presented as followed by a brief description of several typical expenses.

1.Review the system of internal control over expenses;

2. Verify the authority for the expense incurrence;

3. Audit by comparison with prior periods, sales and related expenses;

4. Determine the propriety of expense account classification;

5. Analyze selected accounts to ascertain if these are normal;

6. Watch for items charged to expense, which should be capitalized;

7. Inpect expense vouchers for major items;

8. Ascertain that all expenses have been recorded;

9. Compare each expense with the approved budget; and

10. Verify compliance with existing laws and regulations as well as municipal ordinances relative to pertinent expenses of the Cooperative.

Depreciation and amortization charges ordinarily are verified in the connection in the examination of the fixed tangible and intangible assets and their related depreciation allowance accounts. The computations of the period changes could be verified and traced to the expense accounts and charges to allowance for depreciation accounts should be critically examined. The method of computing depreciation should be consistent from year to year.

The repair and maintenance expense accounts normally are analyzed at the time the fixed assets accounts are audited. Repair and maintenance charges should receive considerable attention in order to ascertain that correct distributions have been made to the correct amounts and departments and that expense and capital charges have not been confused; neither expense nor assets are overstated....

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