The financial statements of XYZ Limited reflects long-term borrowings from the banks, financial institutions, leasing, and hire purchase companies.…

The audit procedures required to be undertaken by CA X while auditing borrowings is as follows: Review board minutes for approval of new lending agreements. During review, ensure that new loan agreements or bond issuances were authorized. Ensure that significant debt commitments are approved by the board of directors.Check the details of loans recorded (interest rate, nature and repayment terms) to the loan agreement. Verify that borrowing limits, if any, imposed by the agreements are not exceeded.Roll out and obtain independent balance confirmations (SA 505) in respect of all the borrowings from the lender (banks/ financial institutions etc.).Verify the details of leases and hire purchase creditors recorded to underlying contracts/agreements.In case of Debentures, examine trust deed for terms and dates of redemption, borrowing restrictions and compliance with covenants.When debt is retired, ensure that a discharge is received on assets securing the debt.Obtain Written Representation that all the liabilities which have been recorded represent a valid claim by the lenders.