A beginner s guide to auditing newcomers to finance expenses

Hahahi, hello everyone, after so many days, the third course of the "Beginner's Guide to Auditing" series has finally met with you!

Before we begin, let's review the "short-term borrowing" and "long-term borrowing" discussed in the previous issue

The two accounts of short-term loans and long-term loans are the money borrowed by enterprises from banks and other financial institutions

According to the time of borrowing and the form of security of the borrowing, short-term borrowing and long-term borrowing will also have different classificationsIn general, the money borrowed by enterprises from banks and other financial institutions can be divided into short-term loans and long-term loans, and short-term loans and long-term loans can be further subdivided into credit loans, guaranteed loans, mortgage loans, pledge loans, etc.

The review of these two subjects is also cumbersome, but fortunately, these two subjects have a lot of correlation with monetary funds, so when we review the monetary funds subject, we can also do part of the audit procedures for short-term loans and long-term loans, which can not only save our time and energy, but also make it easier to find problems in mutual verification.

We have talked about the above content in the previous course, if you are vague about the above content, you can read more of my previous article and re-consolidate it.

Next, we will officially start today's course, and the subject we are going to talk about today is called"Finance Charges".Similarly, this account is also very closely related to "short-term borrowing" and "long-term borrowing".

So, what is financial expense, and how is this account related to short-term and long-term borrowings?And how should it be judged?

Let's follow my steps now and learn more about this subject!

The so-called financial expenses, refer to:A series of expenses borne by enterprises in the process of production and operation to raise fundsFor example, the interest income and expenditure of bonds, bills, loans and deposits, the exchange gains and losses caused by foreign currency translation, and the handling fees of financial institutions all need to be accounted for in the financial expense account.

Under normal circumstances, our most common financial expense is the interest expense generated by corporate borrowing, so some partners may think that the interest generated by corporate borrowing should be included in the financial expense account, but this is not accurateNot all borrowing interest is included in the finance charge

If the borrowing of the enterprise is for the purpose of forming assets, such as the construction of fixed assets, research and development of intangible assets, etc., and the money raised by the enterprise is used in these places, then the interest expenses corresponding to these loans need to be capitalized and included in the cost of the relevant assets, and cannot be left in the financial expenses like the interest expenses of other borrowings.

This is the issue of interest capitalization, which we did not talk about in the last course because of the space and relevance, so we left this course to talk about it together with the financial costs.

It is said in the "Accounting Standard for Business Enterprises No. 17 - Borrowing Costs"."If the borrowing costs incurred by an enterprise can be directly attributable to the acquisition, construction or production of assets that meet the conditions for capitalization, they shall be capitalized and included in the cost of relevant assets."

In other words, the interest generated by the company's borrowing may not be included in the financial expense account, and if the borrowing is used for capitalization, the corresponding interest should also be transferred from the financial expense to the cost of the relevant assets.

As for how to calculate the capitalized interest, because the calculation method of special borrowing and general borrowing is different, as well as the write-off of interest income from idle funds, if you really want to talk about it, you need to open a separate article to talk about it, and there are many explanations on the Internet, so I won't repeat it too much here, you can search for it yourself, if you really need to talk about it, I will add it later!

Well, to sum it up,Financial expense accounting is a series of expense expenses incurred by enterprises in the process of production and operation to raise fundsThe short-term borrowing and long-term borrowing we talked about in the last course, the expensed interest expenses incurred by them, will be reflected in the financial expenses, and we can know the interest expenses borne by the enterprise because of the borrowing in the current year in the financial expenses - this is the relationship between these three subjects!

Now that we understand what financial charges are, let's take a look at how they should be reviewed.

The financial expenses of the enterprise are disclosed in the financial statementsInterest expenseInterest incomeExchange gains and lossesBank charges (or other financial institution charges).andMiscellaneousFor each of these projects, the goal of our review is to determine the exact amount of each project.

The review of financial expenses will be much easier than that of monetary funds, short-term loans, and long-term loans, because the majority of this subject is interest expenses, and the review of interest has generally been carried out in the corresponding subjects, so a lot of time and energy can be saved in the subject of financial expenses.

Let's take the interest of short-term borrowing and long-term borrowing as an example, in order to judge whether the interest expense included in the financial expenses is accurate, we need to know the loan principal, the start and end time of the loan, and the borrowing interest rate, and the first and test of these data is the loan contract, loan IOU, bank statement, corporate credit report, these materials we also need in the review of short-term loans and long-term loans in the last course.

Therefore, the review of short-term borrowing and long-term borrowing interest in financial expenses, we have already done it when reviewing short-term borrowing and long-term borrowing, and the financial cost can be saved accordingly.

Of course, under normal circumstances, interest will be concerned in the relevant subject review, but we still can't take it lightly, for example, there are personal loans in other payables, and the enterprise may confirm that it is a personal current account when it is registered, but we have seen the relevant interest expenses in the financial expenses, then it is necessary to re-verify, through communication with the enterprise and related contracts to re-judge the nature of the payment, if it is indeed a personal loan, it is necessary to re-verify whether the interest is accurately recorded.

So what can we do to save energy appropriately and not lead to problems that are missed?In fact, the method is also very simple, that isBreak down financial expenses according to business content!

In terms of interest, although only interest expenses and interest income are disclosed on the statement, we can divide them in more detail, such as what expenses are in the interest expenses, what are the income in addition to the interest income of bank deposits, etc., and then communicate with the colleagues in charge of each other after clarification, so as to prevent omissions.

At the end of the day, I would like to remind you that don't forget to test the details, spot check the relevant vouchers, check the content of the vouchers, and confirm whether the company has truthfully done accounts according to the actual businessDon't forget to take the cut-off test to see if the voucher for financial expenses is cross-period, and if so, it needs to be adjusted to the corresponding period.

Financial expenses are profit and loss subjects, and we learned before that of monetary funds, short-term borrowings and long-term borrowings and other asset and liability accounts, it needs to carry forward profit and loss every month, so under normal circumstances, there will be no beginning and end numbers, and only the amount incurred is disclosed in the statement.

Therefore, in the audit process, our audit methods also need to be adjusted, we can not judge their respective changes through the opening balance and closing balance like the assets and liabilities accounts, we need to introduce the amount of financial expenses in the previous period, and compare the amount of each item of financial expenses in the current period with the amount incurred in the previous period, find out the items with larger changes, and obtain relevant information to analyze the reasons for their changes.

This is the difference between the profit and loss account and the asset and liability accountThe balance of assets and liabilities can be compared through the balance at the beginning and end of the period, and the reason for the change can also be found in the amount incurred in the current period, but the profit and loss account is not good, and the data of the previous period can be compared, and the reason for the change can also be found by combining the data of the previous period.

Therefore, for the audit of profit and loss accounts, the data of the previous period is very important!For enterprises with continuous audits, we can obtain the corresponding data of the previous period from the previous audit working papersFor new enterprises, it is necessary to ask the enterprises to provide the financial data of the previous period during the audit period.

This is a caveat that needs to be reminded in advance, but there are other considerations that we have mentioned in the second part of the review process.

The audit of financial expenses is relatively easy, because this subject is not the main subject we focus on reviewing, and the main ones are the counterparty accounts that are included in the financial expenses. However, just because it's not a key subject doesn't mean that the subject can be handled casually, such asWhether the amount included in the exchange profit or loss of the enterprise is accurateWhether the fees and other items include items that are not financial expenses, as wellWhether there is a span of financial expensesand so on, these cannot be ignored, and we still need to pay attention to them.

In addition, as a collection place for a series of expensed expenses incurred in the process of production and operation of the enterprise to raise funds, we need to reverse infer what fund-raising activities exist in the enterprise in the current year through this account, so as to remind the colleagues in charge of the corresponding account.

After all, auditing is not a one-man show, it requires teamwork to be carried out normally, and many problems need to be found through the comparison between subjects and subjects, so even if it is an easy subject, don't be perfunctory!

The above is all the sharing of financial cost audit in this course, in general, financial cost accounting is the cost of raising funds in the process of production and operation of enterprises, and we should pay attention toThe project and its breakdownChanges from the previous periodCan it be countedWhether the entries are accurateThese four questions.

Starting from these four question angles, we can also complete the audit work of this subject with ease!

Well, the third course of the "Beginner's Guide to Auditing" series is over here, I don't know if the sharing just now can let you have a deeper understanding of the subject of financial costs, of course, if I have missed anything that has not been said, you are also welcome to add!

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