Audit of disclosure in lease notes according to IFRS

Karpachova Olga
PhD student, Banking University, Lviv, E-mail:olga.owlblack@gmail.com, ORCID ID: https://orcid.org/0000-0001-7163-2177

Cite this article:

Karpachova O. (2022) Audit of disclosure in lease notes according to IFRS. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Audyt rozkryttia informatsii u prymitkakh shchodo orendy za vymohamy MSFZ; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 3-4 (292-293), pp. 101-106.

Abstract

Given that almost most Ukrainian companies that apply International Financial Reporting Standards (IFRSs) are now either lessee or lessor, they are required to apply IFRS 16 Leases. This standard has its own requirements for both accounting and disclosure in the notes to the financial statements. Disclosure is a mandatory requirement for IFRS entities. This allows users of financial statements to assess the actual state of the enterprise, namely: to assess the number and value of leased assets, analyze liabilities, etc. As a result, the auditor who audits such entities should review not only the accounting but also the disclosures that are not an integral part of the financial statements. Given that many IFRS professionals consider IFRS 16 to be one of the most complex and risky accounting matters, the auditor should plan sufficient time and human resources for such an audit. The main research methods were general scientific approaches: methods of deduction and induction to determine the purpose and algorithm of the audit of notes, generalizations to determine the disclosure requirements for lessee and lessor. This article sets out the purpose of the lease disclosure audit. The requirements of IFRS 16 are analyzed and a checklist for the auditor during the lease audit is formed. The check letter takes into account the requirements for the tenant and the landlord, taking into account the finance and operating lease. The proposed checklist of the standard requirements for disclosure in notes will help the auditor to optimize his time and check the notes faster. An algorithm for auditing the disclosure of information in the notes on the lease has been developed. In the course of the research, audit statements were identified during the audit of the notes. The basic requirements for the design of audit documentation in the audit of notes are analyzed and formed.

Keywords

audit, IFRS financial statements, ISA, leases, notes to financial statements audit.

JEL classification:M410; DOI:10.32680/2409-9260-2022-3-4-292-293-101-106

UD classification:657.6

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