BIOLOGICAL ASSETS

AUDIT NAME: Biological Assets

AUDIT NUMBER:
AUDIT DATE:
WP.Re Date
f

GENERAL:

IAS 41 Agriculture sets out the accounting for agricultural activity – the

AUDIT OBJECTIVES:
transformation of biological assets (living plants and animals) into agricultural
produce (harvested product of the entity's biological assets). The standard generally
requires biological assets to be measured at fair value less costs to sell.
1. To identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error.

2. To obtain an understanding of internal control relevant to the audit

3. To evaluate the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures made by
management

4. To conclude on the appropriateness of management’s use of the going

concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company and the Group’s ability to
continue as a going concern.

5. To evaluate the overall presentation, structure and content of the financial

statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.

6. To obtain sufficient appropriate audit evidence regarding the financial

 information of the entities or business activities within the

PRELIMINARY WORK:

1. Prepare an engagement memo to announce the audit.

2. Prepare Auditor’s Independence Statement.
3. Obtain an understanding of the auditor’s operations through research and
interviews.
4. Perform a general overview of the internal control environment and establish the
scope of the audit.
5. Develop appropriate audit tests to provide assurance that management’s objectives
are being met, document in audit work program.
AUDIT PROCEDURES & TESTING:

1. General
a. Obtain the following, where applicable:
i. Policies and Procedures
ii. Organizational Charts
iii. Prior Audit Reports
iv. External Auditor Management Reports
v. Regulatory Examination Reports
vi. Related Information Regarding Laws and Regulations
b. Review policies and procedures to determine adequacy. Ensure the policies
and procedures have been communicated to appropriate personnel.

c. Review any prior examination reports to determine whether corrective action

has been implemented for noted deficiencies.

2. Measurement

a. Biological assets within the scope of IAS 41 are measured on initial

recognition and at subsequent reporting dates at fair value less
estimated costs to sell, unless fair value cannot be reliably measured.

3. Government Grants

a. Unconditional government grants received in respect of biological assets

measured at fair value less costs to sell are recognised in profit or loss when
the grant becomes receivable.
 b. Disclosure

a. Disclosure requirements in IAS 41 include:

i. aggregate gain or loss from the initial recognition of biological
assets and agricultural produce and the change in fair value less
costs to sell during the period* [IAS 41.40]
ii. description of an entity's biological assets, by broad group [IAS
41.41]
iii. description of the nature of an entity's activities with each group of
biological assets and non-financial measures or estimates of
physical quantities of output during the period and assets on hand at
the end of the period [IAS 41.46]
iv. information about biological assets whose title is restricted or that
are pledged as security [IAS 41.49]
v. commitments for development or acquisition of biological assets
[IAS 41.49]
vi. financial risk management strategies [IAS 41.49]
vii. reconciliation of changes in the carrying amount of biological
assets, showing separately changes in value, purchases, sales,
harvesting, business combinations, and foreign exchange
differences*
b. If fair value cannot be measured reliably, additional required disclosures
include:
i. description of the assets 
ii. an explanation of why fair value cannot be reliably measured 
iii. if possible, a range within which fair value is highly likely to lie 
iv. depreciation method 
v. useful lives or depreciation rates 
vi. Gross carrying amount and the accumulated depreciation,
beginning and ending.

c. If the fair value of biological assets previously measured at cost subsequently

becomes available, certain additional disclosures are required. [IAS 41.56]

WORK PAPERS:

1. Organize all relevant work papers in a clear and logical and manner and cross
reference audit steps to their corresponding work papers.

2. Create a final index for the work paper bundle.

3. Compile and securely store audit CYA files for reference if needed.
AUDIT FINDINGS & REPORTING:

1. Document summaries of all audit findings as soon as exceptions are noted.

2. Recommend to auditee any appropriate judgements, internal control or operational
recommendations as a result of the review.
3. Determine whether to include each audit finding in final audit report based on the
audit disposition, the overall materiality to the audit and the relative risk exposure.
4. Prepare the draft audit report for review by auditee.
5. Distribute tentative and preliminary audit report to auditor and request responses
in two weeks.
6. Compile final audit report with auditor’s, review of errors, and distribute to
appropriate District management.

Auditor Signature:
Date: