The procedure of comparing the total balance in loans payable, interest expense, and accrued interest with the prior year is to identify possible misstatements of interest expense, accrued interest, or loans payable.

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Comparing the total balance in loans payable, interest expense, and accrued interest with the prior year can help identify possible misstatements in these accounts that could affect the accuracy of financial statements. This procedure can reveal errors, omissions, or fraud related to interest expense, accrued interest, or loans payable. Therefore, it is an essential part of the audit process to ensure the reliability of financial information.

The Procedure of Comparing the Total Balance in Loans Payable