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Process to Adopt Liabilities
It is significant that the auditor realises which such liabilities can exist and he should obtain reasonable steps to unearth them whether they exist. The process to adopt includes:
1) Enquiry of other knowledgeable officers and the directors;2) Representation in an appropriate letter of representation from the directors;3) Minutes of meetings where such the existence of unrecorded liabilities may be mention;4) Post-balance sheet events review including the inspection of purchase invoices and payments after date.5) Reviewing last year's working papers to verify whether any liabilities existing after then have been excluded.6) Being constantly attentive to the possibility of that a liability. For example, where such the client sells goods matter to warranty time this would attentive the auditor at once of outstanding commitments.
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