An Audit Plan To Examine Long-Term Debt Most Likely Would Include Steps That Require

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An Audit Plan To Examine Long-Term Debt Most Likely Would Include Steps That Require

a. Comparing the carrying amount of held-to-maturity securities with their year-end market values. b. Correlating interest expense recorded for the period with outstanding debt. c. Verifying the existence of the holders of the debt by direct confirmation. d. Inspecting the accounts payable subsidiary ledger for unrecorded long-term debt.
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B. By reconciling interest expense with interest-bearing obligations, the auditor verifies the amount of outstanding liabilities. If interest expense is excessive in relation to the long-term debt, unrecorded interest-bearing obligations may be outstanding.
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