Audit approach for leases Describe the substantive procedures typically used to test leases
General substantive procedures for leases include:
• Obtain copies of lease agreements, read the agreements, and develop a schedule of lease expenditures.
• Review the lease expense account, select entries to the account, and determine if there are entries that are not covered by the leases obtained from the client. Determine if the expenses are properly accounted for.
• Review the relevant criteria from the FASB's codified standards (ASC) to determine which leases meet the requirement of capital leases.
• For all capital leases, determine that the assets and lease obligations are recorded at their present value. Determine the economic life of the asset. Calculate amortization expense and interest expenses, and determine any adjustments to correct the financial statements.
• Develop a schedule of all future lease obligations or determine whether the client's schedule is correct by referring to underlying lease agreements.
• Review the client's disclosure of lease obligations to determine that it is in accordance with GAAP.
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a. Larceny is easier to detect than skimming and is less common. b. Larceny occurs when employees steal cash before the amounts have been recorded in the accounting system. c. Smaller occurrences of larceny are often written off as "shorts" or "miscounts." d. Perpetrators of larcenies must have direct access to inventory or other assets.
The main difference in the master budget process for the three types of organizations involves the preparation of the
a. cash budget. b. capital expenditures budget. c. financial budgets. d. operating budgets.
A court will not review an administrative agency's decision until the party seeking review first exhausts all administrative remedies.?
Indicate whether the statement is true or false
The last step in the decision-making process is to collect the data.
Answer the following statement true (T) or false (F)