M/s AR & Associates have been appointed as statutory auditors of Future Limited, a company engaged in the business of manufacturing of hardware…

An entity in addition to making purchases and incurring employee benefit expenses, also incurs other expenditures like rent, power and fuel, repairs and maintenance, insurance, travelling, miscellaneous expenses etc., that are essential and incidental to running of business operations. While the auditor may choose to analyse the monthly trends for expenses like rent, power and fuel, an auditor generally prefers to vouch for other expenses to verify following attributes: (i) Whether the expenditure pertained to current period under audit; (ii) Whether the expenditure qualified as a revenue and not capital expenditure; (iii) Whether the expenditure had a valid supporting document like travel tickets, insurance policy, third party invoice etc.; (iv) Whether the expenditure has been classified under the correct expense head; (v) Whether the expenditure was authorised as per the delegation of authority matrix; (vi) Whether the expenditure was in relation to the entity's business and not a personal expenditure.