A look for unrecorded liabilites will be to verify for the completeness with the data disclosed by management / balances disclosed around the management account. On the other hand, the function is generally the trickiest and toughest. A substantial quantity of informations are expected to fulfill the audit's sufficient level.
How should we assure completeness of contingent liabilities?
- Inquire with management around the status with the on-going project, analyzed the situations and determine possible commitments and contingencies which could have already been created by managment, but not disclosed.
- Delivering bank confirmation to receive external proof on prospective bills payable, letter of credit, and so forth.
- Check out each of the agreements with the Corporation to determine prospective liabilities, for instance: corporate guarantee provided to bank for assure more than subsidiaries' loan.
- Examine minutes & resolutions to recognize on-going activities which could require commitments and contingencies