# Audit of Other Expenses
"Other Expenses" in the P/L typically include rent, power & fuel, insurance, legal & professional, travel, repairs & maintenance, printing & stationery, and miscellaneous expenses. While analytical procedures may suffice for some, the auditor generally prefers to vouch for these expenses.
## A. Six Attributes to Verify in Vouching
For any other expense, the auditor verifies:
1. Period Relevance – Expenditure pertained to the current period under audit (not prepaid or outstanding from another period without proper treatment).
2. Revenue vs Capital – Expenditure qualified as revenue and not capital expenditure.
3. Valid Supporting Documents – Travel tickets, third-party invoices, agreements, etc.
4. Correct Classification – Expenses classified under the correct expense head.
5. Authorisation – Expenditure authorised as per the entity's authority matrix.
6. Business Purpose – Expenditure relates to entity's business and not personal expenditure (especially relevant for closely-held companies).
## B. Specific Expense Audit Procedures
### 1. Rent Expense
- Obtain month-wise expense schedule with rent agreements
- Verify expense has been recorded for all 12 months
- Specific consideration to escalation clause in agreement
- Verify agreement is in the name of entity
- Verify expense pertains to premises used for running business operations
### 2. Power and Fuel Expense
- Obtain month-wise expense schedule along with power bills
- Verify expense has been recorded for all 12 months
- Compile month-wise summary of power units consumed and applicable rate
- Check arithmetical accuracy of bill raised on monthly basis
- Analyse monthly power units consumed by linking to units of finished goods produced
- Investigate reasons for variance in monthly trends
### 3. Insurance Expense
- Obtain summary of insurance policies taken along with validity period
- Verify whether expense has been correctly classified between prepaid and expense for the period based on number of days
### 4. Legal and Professional Expenses
- Obtain month-wise and consultant-wise summary
- For monthly retainership agreements – verify expenditure for all 12 months has been recorded
- For non-recurring expenses – select sample and vouch for the six attributes
- Caution: Some legal expenses may highlight disputes for which entity may not have made any provision (potential contingent liability not disclosed). Such disputes may also not have been discussed with the auditor.
### 5. Travel, Repairs & Maintenance, Printing & Stationery, Miscellaneous Expenses
- Select sample and vouch for the six attributes
- Wherever possible, prepare monthly summary and analytically compare trends
- Perform AP to obtain audit evidence as to overall reasonableness
- Analyse expense per unit produced and compare with previous years
- Ask Management for reasons for significant variances