ABC Ltd. is engaged in manufacturing consumer appliances. During the year ended 31st March 2025, the company has recognized the following: Provision…

Audit procedures while auditing provisions and contingent liabilities: Obtain a list of all provisions and compare them with balances in the ledger.Inspect the underlying agreements like agreement with customers to assess warranty commitments, any legal and other claims on the entity i.e. litigations.Obtain the underlying working and the basis for each of the provisions made, from the management and verify whether the same is complete and accurate.Wherever required, obtain expert's report, calculation and underlying working for the provision amount, example for warranty involving complex calculations, some entities get that valued through an actuary.In the above case, the auditor may request the management to share the actuarial valuation report and in case of any matter under legal dispute, the auditor should request for assessment made by a legal expert in relation to likelihood of a liability devolving on the entity i.e. whether probable or possible or remote as defined above.The auditor should then verify the underlying assumptions used by the expert with the data shared by the management.