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The completeness and proper classification of liabilities are the typical higher audit risks. The complexity of the debt financing arrangements may create a significant risk requiring special audit consideration. This module will discuss tips and techniques for auditing accounts payable, accrued expenses, and common long-term financing arrangements and related debt covenants.

Major Topics:

  • Typical audit procedures related to accounts payable and accrued expenses, including the search for unrecorded liabilities
  • Key controls related to liabilities
  • Auditing long-term debt, including compliance with covenants
  • Determining the proper classification of financing arrangements
  • Proper form of noncompliance waiver letters
  • Impact of noncompliance on disclosures

Learning Objectives

  • Discover and discuss typical audit risks and special audit considerations related to various liabilities.
  • Recognize and tailor the audit plan in response to assessed risk of material misstatement, focusing on the assertions with typically higher risk.
  • Explore and evaluate results from a search for unrecorded liabilities and procedures to assess the propriety of accrued estimates.
  • Discover and evaluate the completeness, classification, and disclosure of financing arrangements – including debt covenant compliance.
Last updated/reviewed: June 8, 2021

Included In Certifications

This course is included in the following Certification Programs:

13 CoursesAudit Training Level 2 - Experienced Staff

  1. Fraud Risk - Complying with Minimum Audit Requirements
  2. Best Practices for Identifying and Evaluating Audit Risk - Linking Risk to the Detailed Audit Plan
  3. Testing Internal Controls - Exploring Strategies for Verifying Operating Effectiveness
  4. Inquiry and Research - Improving Critical Audit Skills
  5. Auditing Investments - Understanding Risks and Procedures for the Most Common Investments
  6. Auditing Accounts Receivable - Focusing Procedures for Testing Existence and Valuation
  7. Auditing Liabilities, Including Long-Term Debt - Addressing the Risks of Completeness, Classification, and Disclosure
  8. Substantive Analytic Procedures - Strengthening Evidence to Satisfy Audit Objectives
  9. Sampling - Avoiding Common Mistakes on Financial Statement and Compliance Audits
  10. Desired Traits of a Star Performer - Visualizing How to Become an Exceptional Staff Auditor
  11. Professional Requirements for Assurance Providers, Including Independence - Understanding Critical Code of Professional Conduct Concepts
  12. Accounting Update - Hot Topics for Preparing Current Period Financial Statements
  13. Auditing & Attest Update - Hot Topics for Current Period Audits and Other Attest Services


Course Complexity: Foundational

No advanced preparation or prerequisites are required for this course.
Designed For: Accountants responsible for auditing accounts payable, accrued expenses and debt.

Education Provider Information

Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
  5:34Learning Objectives and Introduction to Auditing Liabilities, Including Long-Term Debt
  11:58Typical Audit Procedures
  13:26Search for Unrecorded Liabilities
  9:44Auditing Accrued Liabilities
  5:25Loss Contingencies
  12:52Key Controls and Overview of Debt Audit Procedures
  3:08Due on Demand and Subjective Acceleration Causes
  6:23ST Obligations Expected to be Refinanced
  4:25Revolving Credit Arrangements
  12:18Focus on Debt Modification, Extinguishments and Troubled Debt Restructurings
  15:47Focus on Debt Covenants
  1:41:00Auditing Liabilities, Including Long-Term Debt
  PDFSlides: Auditing Liabilities, Including Long-Term Debt
  PDFAuditing Liabilities, Including Long-Term Debt Glossary/ Index