SUBSTANTIVE AUDIT PROCEDURES FOR A LOAN AGREEMENT 8 marks REQUIRED: [Note: do NOT include any Testing of Controls] For the purposes of Substantive Testing, provide 4 (four) substantive audit procedures in examining the loan. Your answer must include what evidence would you select for each procedure. SITUATION: You work for the auditing firm of Hong and Makazian. You have been engaged to audit the financial statements of Geronazzo Corporation for the year ended December 31, 2020. During the year, Geronazzo secured a $800,000 loan from the Sheridan Bank of Canada in order to meet some cash flow needs. Under the terms of the loan, Geronazzo must repay $160,000 plus interest each December 31 starting in the year 2021 and ending in the year 2025. The Current Ratio of Geronazzo, on its annual financial statements, must not fall below 1.4:1. Geronazzo gives you access to the following audit evidence: Your answer must include what evidence would you select for each procedure. SITUATION: You work for the auditing firm of Hong and Makazian. You have been engaged to audit the financial statements of Geronazzo Corporation for the year ended December 31, 2020. During the year, Geronazzo secured a $800,000 loan from the Sheridan Bank of Canada in order to meet some cash flow needs. Under the terms of the loan, Geronazzo must repay $160,000 plus interest each December 31 starting in the year 2021 and ending in the year 2025. The Current Ratio of Geronazzo, on its annual financial statements, must not fall below 1.4:1. Geronazzo gives you access to the following audit evidence: - Board of Directors minutes - The actual agreement with the bank, including relevant dates of the repayments and the signatures of Geronazzo's senior officers - Accounting records that include Geronazzo's bank account records and cash receipts book - Accounting records that include Geronazzo's journalized interest expense and working papers supporting the calculation