[Checklist] Audit of Expenses

An expense is a cost relating to the operations of an accounting period or to the revenue earned during the period or the benefits of which do not extend beyond that period. Expenses are recognized by the following approaches:

a) Identification with revenue transactions

b) Identification with a period of time

In carrying out the audit of expenses, appropriate procedures are employed to obtain reasonable assurance and sufficient appropriate audit evidence about various assertions such as occurrence, completeness, measurements, and presentation and disclosure of expenses.

One may adopt the following checklist for Audit of Expenses:

1. Whether the following aspects of the system of internal control has been reviewed relating to expenses?

a) The systems and procedures relating to incurring of expenses including authorization procedures.

b) Accounting procedures relating to the recognition of expenses.

c) Existence of periodic reports on actual performance vis-a-vis budgets and internal management reports if any.

2. Whether the examination of the relevant records satisfies the validity, accuracy, and other assertions with regard to various expenses incurred by the entity?

3. Whether the analytical procedures involving the analysis of significant ratios and trends been conducted?

4. Whether the examination of the cost of goods, stores, and materials consumed during the year been done?

5. Whether the examination done for purchases of goods and materials made during the year as well as of purchase returns and of opening and closing inventories?

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