What it is
Debt and equity balances tend to have few transactions but large amounts and significant disclosure. The main issues are completeness of borrowings, covenant compliance and classification between current and long-term, and authorization and presentation of equity transactions.
This program covers lender confirmations, agreement review, covenant calculations, debt issuance costs, interest, derivatives and embedded features, equity rollforwards, distributions and share-based payments.
When to use it
- Planning the financing section of an audit.
- When a covenant breach, waiver, refinancing or new debt could affect classification or going concern.
- In a year with equity issuances, redemptions, distributions or option grants.
What’s inside
- Debt listing, agreements and confirmations to lenders
- Covenant compliance, waivers and current / long-term classification
- Interest, debt issuance costs, extinguishment and modification accounting
- Equity rollforward, authorization, distributions, redemptions and stock compensation
- Related party and subsequent events, disclosure and conclusion
Standard cited
This template follows AU-C 330 / ASC 470 / ASC 505. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
What happens if the entity breaches a covenant at year end?
Under ASC 470-10-45 debt that is callable because of a covenant violation at the balance sheet date is classified as current unless the lender has waived or lost the right to call it for more than one year (or the operating cycle, if longer) from the balance sheet date, or a grace period applies and it is probable the violation will be cured within it. Evaluate the waiver terms and disclosures carefully and consider going concern.
How should a debt issuance cost be shown?
Under ASC 835-30-45-1A costs for term debt are presented as a direct deduction from the carrying amount of the debt and amortized to interest expense. ASC 835-30 does not address line-of-credit costs. The SEC staff has said it would not object to presenting them as an asset amortized over the term of the arrangement, and ASU 2015-15 added that statement to the Codification. The entity applies one policy consistently.
Related templates
- Lead Schedule Template (Excel)
- Going Concern Evaluation Memo (AU-C 570 / ASC 205-40)
- Audit Program: Fixed Assets
Last updated 11/04/2026. All free templates.