Course Introduction
The Borrowing Costs and Capitalization Audit Training Course provides a comprehensive and practical framework for accounting for, auditing, and controlling borrowing costs associated with qualifying assets. The program equips auditors, accountants, finance professionals, and financial reporting specialists with the knowledge required to evaluate whether borrowing costs have been appropriately identified, measured, capitalized, expensed, and disclosed.
The course examines the relationship between financing arrangements and assets that require a substantial period of time to become ready for their intended use or sale. Participants will explore qualifying assets, specific and general borrowings, capitalization periods, commencement and suspension considerations, cessation of capitalization, and the accounting treatment of borrowing costs incurred during construction, development, production, or other qualifying activities.
A strong emphasis is placed on the audit of borrowing cost calculations and capitalization schedules. Participants will learn how to test interest expense, eligible expenditures, capitalization rates, accumulated expenditures, temporary investment income, loan balances, financing fees, and other relevant inputs. Practical procedures will be developed to identify over-capitalization, under-capitalization, inappropriate capitalization periods, duplicate costs, unsupported assumptions, and errors in allocation.
The program also addresses complex financing structures and project environments where borrowing costs may involve multiple facilities, variable interest rates, foreign currency borrowings, intercompany loans, construction projects, infrastructure developments, investment properties, inventories, and internally developed assets. Participants will learn how to evaluate whether management's accounting judgments are supported by contractual documentation, project evidence, financial records, and appropriate audit evidence.
Internal controls and financial reporting considerations are integrated throughout the course. Participants will assess controls over borrowing approvals, loan administration, project expenditure capture, interest calculations, capitalization schedules, reconciliations, journal entries, management review, and financial statement disclosures. Audit procedures are linked to key assertions including completeness, occurrence, accuracy, classification, valuation, cut-off, and presentation.
The course incorporates data analytics, automation, financial systems, and emerging technology into modern borrowing cost audits. Participants will examine how ERP systems, automated capitalization calculations, project accounting platforms, loan-management systems, data analytics, AI-assisted review, and continuous monitoring can improve audit coverage while creating new risks involving data integrity, system configuration, access rights, model logic, cybersecurity, and automated journal entries.
Duration
5 days
Who Should Attend
-
External auditors responsible for auditing borrowing costs, financing arrangements, and capitalized assets.
-
Internal auditors reviewing financing controls, capital projects, and financial reporting processes.
-
Audit managers and supervisors overseeing complex asset and financing audits.
-
Financial accountants responsible for borrowing cost calculations and capitalization schedules.
-
Finance managers responsible for project financing and financial reporting.
-
Financial reporting specialists dealing with capitalization and asset accounting.
-
Treasury professionals involved in borrowing arrangements, interest calculations, and financing structures.
-
Project finance professionals responsible for construction and development financing.
-
Management accountants supporting capital expenditure and project cost reporting.
-
Controllers responsible for general ledger, capitalization, and financial close processes.
-
Risk and compliance professionals assessing financing and financial reporting risks.
-
Forensic auditors investigating unusual financing transactions or inappropriate capitalization.
-
Accounting professionals working with construction, infrastructure, manufacturing, or development projects.
-
Professionals responsible for ERP-based project accounting and automated capitalization processes.
-
Finance, accounting, audit, treasury, and project professionals seeking advanced borrowing cost audit skills.
Course Objectives
-
Develop practical expertise in auditing borrowing costs and determining whether capitalization has been appropriately applied to qualifying assets.
-
Identify qualifying assets and assess whether expenditures meet the conditions necessary for borrowing cost capitalization.
-
Evaluate specific and general borrowing arrangements and determine appropriate capitalization rates and allocation methodologies.
-
Test interest calculations, financing costs, eligible expenditures, accumulated expenditure balances, and capitalization schedules.
-
Assess the commencement, suspension, resumption, and cessation of borrowing cost capitalization using documented project and financing evidence.
-
Identify over-capitalization, under-capitalization, duplicate capitalization, inappropriate allocations, and unsupported management judgments.
-
Audit complex financing arrangements involving multiple loans, variable interest rates, foreign currency borrowings, and intercompany financing.
-
Evaluate internal controls over borrowing approvals, loan administration, project expenditures, capitalization calculations, reconciliations, and financial reporting.
-
Apply data analytics and technology-enabled audit techniques to test large populations of financing and project expenditure transactions efficiently.
-
Prepare high-quality audit evidence, working papers, findings, recommendations, and conclusions concerning borrowing costs, capitalization, controls, and disclosures.
Comprehensive Course Outline
Module 1: Borrowing Costs and Capitalization Audit Fundamentals
-
Understanding borrowing costs, capitalization principles, and their relationship to asset recognition and financial reporting.
-
Examining the financial statement risks created by inappropriate capitalization of interest and other qualifying financing costs.
-
Linking borrowing cost audits to assertions including completeness, accuracy, valuation, classification, cut-off, occurrence, and presentation.
-
Developing a risk-based audit approach for borrowing costs based on financing complexity, project size, management judgment, and capitalization exposure.
Module 2: Qualifying Assets and Capitalization Eligibility
-
Identifying qualifying assets and assessing whether they require a substantial period of time to become ready for intended use or sale.
-
Evaluating construction, development, production, infrastructure, inventory, and internally generated asset projects for capitalization eligibility.
-
Testing project expenditures to determine whether they represent eligible costs incurred in preparing qualifying assets.
-
Assessing management's classification decisions and identifying expenditures that should remain expensed rather than capitalized.
Module 3: Specific Borrowings and Capitalization Calculations
-
Auditing borrowing arrangements specifically obtained to finance qualifying assets and evaluating the connection between financing and project expenditures.
-
Testing loan agreements, drawdowns, interest rates, repayment schedules, fees, balances, and financing documentation.
-
Recalculating capitalized borrowing costs using eligible expenditures and the applicable interest rate or other relevant calculation methodology.
-
Evaluating investment income earned on temporarily invested specific borrowings and its effect on capitalization calculations.
Module 4: General Borrowings and Capitalization Rates
-
Understanding capitalization procedures for qualifying assets financed from general borrowing pools rather than dedicated project facilities.
-
Testing the determination of weighted-average capitalization rates using relevant general borrowing balances and associated financing costs.
-
Evaluating whether management has appropriately excluded borrowings that are not relevant to the capitalization calculation.
-
Recalculating capitalization allocations and testing consistency between borrowing data, project expenditures, and accounting records.
Module 5: Capitalization Periods, Suspension, and Cessation
-
Determining whether conditions for commencement of capitalization have been satisfied based on expenditures, borrowing costs, and development activities.
-
Auditing periods of active development and identifying interruptions that may require capitalization to be suspended.
-
Evaluating project delays, administrative interruptions, technical problems, regulatory delays, and other circumstances affecting capitalization periods.
-
Testing the cessation of capitalization when qualifying assets are substantially ready for intended use or sale and identifying inappropriate continuation.
Module 6: Complex Financing and Specialized Borrowing Cost Issues
-
Auditing borrowing costs involving variable-rate loans, refinancing arrangements, multiple facilities, revolving credit, and complex financing structures.
-
Evaluating foreign currency borrowings and assessing the financial reporting and audit implications of exchange differences and financing costs.
-
Testing intercompany loans, shareholder financing, related-party borrowings, and other non-standard financing arrangements.
-
Assessing borrowing costs associated with construction contracts, major infrastructure projects, investment properties, inventories, and internally developed assets.
Module 7: Internal Controls, Reconciliations, and Substantive Audit Testing
-
Evaluating controls over borrowing approvals, financing documentation, loan administration, interest calculations, and project expenditure capture.
-
Reconciling loan balances, interest expense, capitalized borrowing costs, project accounting records, and general ledger accounts.
-
Performing substantive testing of financing transactions, interest calculations, project expenditures, capitalization entries, and supporting documentation.
-
Identifying control deficiencies involving manual calculations, unauthorized financing, inaccurate project coding, duplicate capitalization, and inadequate management review.
Module 8: Technology, Data Analytics, Automation, and Emerging Risks
-
Auditing automated borrowing cost calculations, ERP capitalization modules, project accounting systems, and loan-management platforms.
-
Using data analytics to identify unusual interest rates, duplicate expenditures, abnormal capitalization entries, unsupported project costs, and unexpected timing patterns.
-
Evaluating interfaces between treasury, loan-management, procurement, project accounting, fixed asset, and general ledger systems.
-
Assessing emerging risks involving AI-assisted financial calculations, automated journal entries, cybersecurity, privileged access, system configuration, and data integrity.
Module 9: Financial Reporting, Evidence, and Disclosure Auditing
-
Evaluating borrowing cost accounting policies and determining whether capitalization practices are consistently applied and adequately supported.
-
Testing the presentation and classification of capitalized borrowing costs within asset balances, depreciation bases, and related financial statement accounts.
-
Reviewing disclosures concerning accounting policies, significant financing arrangements, capitalized borrowing costs, and relevant financial reporting judgments.
-
Preparing audit working papers that clearly document calculations, assumptions, evidence, exceptions, reconciliations, conclusions, and review procedures.
Module 10: Integrated Borrowing Cost Audit Case Studies
-
Conducting an end-to-end audit of borrowing costs associated with a major construction project financed through specific and general borrowings.
-
Recalculating capitalization using project expenditure schedules, loan balances, interest rates, capitalization periods, and temporary investment income.
-
Investigating practical cases involving project delays, refinancing, foreign currency borrowings, intercompany financing, and inappropriate capitalization.
-
Preparing audit findings, management recommendations, corrective actions, and final conclusions on borrowing cost accounting and capitalization controls.
Training Approach
This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.
Tailor-Made Course
This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: training@upskilldevelopment.com Tel: +254 721 331 808
Training Venue
The training will be held at our Upskill Training Centre. We also offer training for a group (at a discount of 10% to 50%) at requested location all over the world. The Onsite course fee covers the course tuition, training materials, two break refreshments, buffet lunch, airport transfers, Upskill gift package, and guided tour.
Visa application, travel expenses, dinners, accommodation, insurance, and other personal expenses are catered by the participant
Certification
Participants will be issued with Upskill certificate upon completion of this course.
Airport Pickup and Accommodation
Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: training@upskilldevelopment.com, +254 721 331 808
Terms of Payment:
Unless otherwise agreed between the two parties’ payment of the course fee should be done 3 working days before commencement of the training so as to enable us to prepare better.
