If interest expense recorded by the client is significantly lower than the auditor's expectation,it may mean that interest payments have not been properly recorded,possibly having been charged to principal.

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If interest expense recorded by the client is significantly lower than the auditor's expectation, it could indicate that interest payments have been capitalized rather than being charged as an expense, resulting in understating of interest expense in the income statement. This could lead to overstatement of net income, assets, and equity, and understatement of liabilities.

If Interest Expense Recorded by the Client Is Significantly Lower