HANDOUT # 01:

CASE 01: PPE

 Visit the property to verify the physical existence.

 Inspect the property transfer deed to verify the rights and obligation.
 Inspect the bank statement to verify $20m paid to verify the amount.
 Inspect the NCA register to ensure the property purchased was recorded to verify the
completeness.
 Inspect the cost breakdown schedule to verify the revenue expenses are not capitalized.
 Inquire the management expert about the basis of estimation of useful life to ensure it is
reasonable with the help of expert.
 Recalculate the NCA register to verify the mathematical accuracy.
 Inspect and read the notes to verify complete disclosure of property purchased and life
increased as per IAS-16.

CASE 02: Revaluation

 Inspect the VALUER REPORT of Ansari Associate to verify the valuation of $2m.
 Analyze the market reputation and independency level of Ansari Associate to ensure the
assumptions are reasonable.
 Inspect the NCA register to verify $2m debited and agree it with increase in revaluation surplus.
 Obtain the equity movement records to verify the excess depreciation is settled within the
equity.
 Recalculate the NCA register and equity movement records to verify the mathematical accuracy.
 Inspect and read the notes to verify the complete disclosure of revaluation as per IAS-16.

CASE 03: Devaluation

 Inspect the VALUER REPORT to verify $3m is devalued.

 Obtain NCA register to verify assets is reduced by $3m.
 Obtain equity movement records to make sure the revaluation surplus is debited by $1m.
 Inspect the income statement to verify $2m is charged as an expense.
 Obtain the equity movement record and agree the reversal of depreciation is settled with in
equity.
 Recalculate the NCA register and equity movement records to verify the mathematical accuracy.
 Inspect and read the notes to verify the complete disclosure of devaluation is as per IAS-16.

CASE 04: Addition and Disposal

 Inspect the minutes of BOD meeting to verify the authorization of additions and disposals.
 Physically inspect the machine to verify the physical existence of new machine purchased.
 Inspect the cost breakup schedule to verify the training cost is not added in the cost of machine.
 Obtain the NCA register to verify the recording of new machine purchased and removal of old
machines sold to ensure the completeness.
 Inspect the NCA register to ensure 4 months depreciation charged on the new machine
purchased.
 Inspect the income statement to verify $2.5m gain recorded as other income.
 Recalculate the NCA register to verify the mathematical accuracy.
 Inspect and read the notes to verify the complete disclosure of addition and disposals as per
IAS16.

CASE 05: Research and Development

 Inspect the minutes of BOD meeting to verify the intention to complete the project.
 With the help of expert visit the R&D unit to verify the availability of practical resources and
technical feasibility of the project.
 Obtain the cash flow and other financial document to verify the financial feasibility for making
the project.
 Ask the management about the basis of estimation of cost and revenue to verify it is reasonable.
 Review the marketing strategies made by company to verify the economic benefit of the project
is probable.
 Inspect the income statement to verify $8m charged as research expense.
 Inspect the NCA register to make sure $12m is recorded as intangible asset.
 Inspect NCA register to verify $2.4m depreciation is charged.
 Obtain the legal license to verify the approval of the product before launching to make sure
rights and obligation.
 Recalculate the NCA register to verify the mathematical accuracy.
 Inspect and read the notes to verify the complete disclosure of Intangible asset as per IAS-38.