Quick Question: I am tasked to prepare audit programs for an Airline for various
ID: 2600912 • Letter: Q
Question
Quick Question: I am tasked to prepare audit programs for an Airline for various areas. This is the most confusing assignment ever. I would like a simple template or outline of an audit program if available. I am tasked with 2 areas (1. Notes Payable and 2. Property, Plant, and Equipment (PPE-Fixed Assets) so if there is one that exists specific to these areas and/or to this type of company I would be so happy!! This is my first question on Chegg so I am not sure exactly what is expected or how it works, sorry if I am not much help here.
Explanation / Answer
Outline of audit program for Notes Payable for an airline company:
The auditor should start by reviewing the results of the risk assessment procedures that are currently in place within the airline company. Then the impact on tests of balances should be assessed. The second step of the audit program will be to either obtain or prepare a schedule of notes which will include components like beginning balances, additions, payments and ending balances. The auditor should also compute the mathematical accuracy of the schedule and this should be reconciled with the airline company’s general ledger. In terms of audit documentation the auditor will have to examine the notes that were cancelled during the period and collect the related evidence of payment. The audit program will also include confirming significant balances which were outstanding during the period. The audit objective that requires existing notes payable to be included in the notes payable schedule is satisfied by reviewing the bank reconciliation for few notes that have been credited directly to the bank account by the bank.
Outline of audit program for property, plant and equipment (PPE) for an airline company:
The auditor is required to begin by getting an understanding of the airline company and its environment so as to be able to determine the various inherent risks associated with the company’s PPE. The auditor will have to develop an understanding of the internal control with respect to PPE. An example of this is that auditor can review the capital budgets. Risks of material misstatements will have to be assessed through designing tests of controls and substantive procedures. For this the auditor will have to substantiate the existence of PPE, establish the completeness of recorded PPE, verify the cutoff of transactions, determine the right of the airline company to the PPE, establish proper valuation and allocation of PPE, determine the accuracy of classification of PPE and determine the accuracy of depreciation. Verification of records will include verification of opening balances, capital work in progress, additions during the year, impairment, and deletions of PPE.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.