Importance As market relations and economy in agriculture evolve, it becomes necessary to build an efficient mechanism for controlling of agricultural businesses. The more efficient the system of control and audit, the better loans and borrowings in agricultural entities are accounted for. Control of loans and borrowings implies checking whether business decisions on loans and borrowings are implemented, in order to assure their reliability, legitimacy and economic reasonableness. Generally, control encompasses each aspect of the entity's financial and business operations, relying upon the principles of documentary and effective control. Inspection is a part of such control. Inspection refers to a set of statutory controlling activities intended to verify, on a documentary and effective basis, that financial and business operations the inspected entity conducts in the inspected period are legitimate, reasonable and correctly recognized in accounting records and financial statements. Inspection also focuses on the legitimacy of activities the director, chief accountant and other employees perform. Objectives The research aims at checking how loans and borrowings are accounted for in order to get a sufficient assurance of the reliability of financial reporting figures reflecting the entity's amounts due for borrowings obtained. In performing any inspection, the inspector should check the period, amount, accounts used to recognize loans and borrowings, and sources employed to repay interests on loans and borrowings. Borrowing costs should be carried as expenses in the period when they are incurred, other than a portion of expenses that should be included into the value of an investment asset. To reach the objective, the inspector sets up the principle objective, i.e. to determine specific focus and directions for checking loans and borrowings. Methods Using controlling and inspection procedures (methods and techniques), I analyze various aspects of accounting of loans and borrowings and outline the most effective methods and procedures for controlling the loans and borrowings. Results Final working papers are designated for control planning, collection of evidence, immediate control and inspection of loans and borrowings. Conclusions and Relevance If practically applied, the results will help define scope of work, inspection focus, as needed to prepare a report on reliability of financial statements in terms of reporting on loans and borrowings.
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