Typically, when determining the appropriate audit procedures to perform for debt accounts, the auditor will usually decide to test debt obligations, including interest, using only substantive procedures.

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Debt accounts are considered material and significant accounts in the financial statements. Therefore, auditors usually perform substantive procedures such as confirmation with third parties, obtaining copies of loan agreements, and reviewing relevant documents and records to verify the existence, accuracy, and completeness of debt obligations. Audit procedures related to debts are not usually restricted to substantive procedures only. However, the auditors may also perform some tests of controls to evaluate the effectiveness of the internal controls related to debt transactions.

Typically, When Determining the Appropriate Audit Procedures to Perform for Debt