What Are the Most Common Uses of a Pro Forma Balance Sheet?

The balance sheet audit is an audit of the authenticity and impartiality of each item of the balance sheet to determine the financial status and solvency of the audited unit. It is an important stage in the development of modern financial auditing. Born between 1910 and 1930. Initially, banks or other credit institutions reviewed various items listed on the company's balance sheet in order to investigate the credit status of borrowing units (ie, financial status and solvency). Therefore, the early balance sheet audit is also called "credit audit". Later, this theory of credit auditing was theoretically and systematically used widely for auditing for other purposes, and developed into a more mature theory of balance sheet auditing. In terms of methods, the characteristics of balance sheet auditing are to get rid of the shackles of books as much as possible, and to open up the field of vision and use methods such as on-site investigation, supervision of inventory or participation in inventory and inquiry to verify the various claims listed on the unit's balance sheet And debts, and independently verify whether each asset and liability actually exists, and there are no omissions or false reports. In terms of audit scope, the balance sheet audit mainly adopts spot check. ^[1]

Balance sheet audit

The purpose of reviewing the opening numbers is to understand

In the middle of the 19th century, the rise of stock companies led to further capital ownership and management rights

1. The purpose of reviewing the identification of accounting fraud in the balance sheet The identification of accounting fraud in the balance sheet has the following purposes:

(1) Confirmation of various assets, liabilities and

Accounting and auditing of corporate accounting standards

First of all, the purpose of balance sheet auditing is no longer the traditional error checking and prevention, but to verify that the balance of all items in the balance sheet is true, which has changed the audit content. Auditors do not need to check the transaction activities during the audit period, but only the accounting records and inventory related to the balance of the balance sheet items

1. Review and evaluation of audit evidence

Appropriate methods to collect real, relevant and sufficient audit evidence

I. Regular audit of balance sheet.

The routine audit of the balance sheet is mainly to check whether the content of the balance sheet is complete, whether the calculations in the table are correctly balanced, and whether the related items are accurate.

1. Review the completeness of the contents of the balance sheet. The first is to check whether the filling date is missing; the second is to check whether the items to be filled in are complete; the third is to check whether the relevant personnel's signature is complete.

2. Review the accuracy of relevant figures in the balance sheet. The first is to check whether the small counts in the table are correct; the second is to check whether the total counts in the table are correct; the third is to add the numbers of the left and right items in the table to see whether the total balance sheet is balanced.

3. Examine the comprehensive items in the balance sheet for accuracy. The items directly filled in according to the ending balances of the relevant general ledger accounts should be checked with the closing balances of the relevant general ledger accounts; the items that need to be filled out based on the aggregate offset or analysis should be added to the balances of the relevant general ledger accounts The amount of offset and analysis are checked against each other;

Consolidated balance sheet audit procedures:

Audited Enterprise Pages

Audit procedures	Implementation statement	Working paper index number
1. Obtain legal documents such as long-term investment agreements, contracts, articles of association of invested enterprises, agreements, accounting statements of invested enterprises and invested enterprises, and check: Check whether the consolidated scope of the consolidated financial statements of the audited enterprise is correct. Check the consistency of the final accounting date, accounting period and accounting policies of the audited enterprises. 2. The parent company offsets the amount of the subsidiary's equity investment project and the share held by the parent company in the owner's equity of the subsidiary, and the difference is separately reflected in the long-term investment project as the "consolidation spread" (the credit balance is shown as negative ). 3 Bonds held by the parent company, its subsidiaries, and each other against each other shall be offset, and the difference shall be treated as the consolidated spread. 4 The debt and debt items between the parent company, its subsidiaries, and its subsidiaries, including items such as accounts receivable, payable, advance receipt, and advance payment, shall be offset. 5. After the parent company and the subsidiary company and the subsidiary company's accounts receivable and accounts payable offset each other, the amount of bad debt provision provided by the offset accounts receivable should also be offset. In the consolidated balance sheet, the provision for bad debts shall be shown in the amount accrued for the accounts receivable after offsetting. 6. For the amount of bad debt provision offset due to the internal accounts receivable offset in the preparation of consolidated accounting statements in the previous accounting period, when preparing the consolidated entry for the current accounting period, a debit entry should be debited and credited to the beginning of the year. undistributed profit. To offset the bad debt provision accrued due to the increase in internal receivables in the current period, when preparing the entry, you should debit the bad debt preparation items and credit the management expense items; for the bad debts written off during the current period when the internal receivables decrease When preparing for offsetting, deducting management expenses and crediting bad debt provision items when preparing offsetting entries. 7. In the inventory items, the amount of unrealized internal sales profits generated by internal sales shall be offset. 8. In fixed assets and other related items, the amount of unrealized internal sales profits arising from internal sales shall be offset. 9. Amounts in the owner's equity of subsidiaries that are not owned by the parent company should be treated as minority shareholders' equity. Prior to the consolidation of the owner's equity items in the balance sheet, they should be listed separately and reflected as a total. 10 The amount of undistributed profits in the owner's equity is listed based on the amount of undistributed profits at the end of the consolidated profit distribution statement.

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