HOUSE‘Audit and Assurance REVISION SUMMARY by House Audit k summary XXX is a new client There will be an increased detection risk on the audit Furthermore, the opening balance may be misstated ‘Audit team should be suitably experienced. Adequate time should be allocated for team members to obtain an understanding of the company. Review previous auditor's work to assess the opening balances. Fraud and errors Identified fraud should be written off in statement of profit and loss. If some other fraud have not been covered, the financial statements could be misstated. Discuss with the finance director, what controls have been put in place to prevent any similar frauds, The team should maintain their professional scepticism and be alert to the risk of further fraud and errors. 00 a policy of revaluing its land and buildings and this year has updated the valuations of all land and buildings. Property, plant and equipment could be under or overvalued if the recent valuation has not been carried out in accordance with IAS 16 Property, Plant ‘and Equipment and adequate disclosures may not have been made in the financial statements. Discuss with management the process adopted for undertaking the valuation, including whether the whole class of assets was revalued and if the valuation was undertaken by an expert. This process should be reviewed for compliance with IAS 16. Review the disclosures of the revaluation in the financial statements for compliance with IAS 16. XXX has a material expenditure on updating, repairing and replacing PPE (refurbishment) If this expenditure is of a capital nature, it should be capitalised as part of property, plant and equipment (PPE) in line with IAS 16 Property, Plant and Equipment. However, if it relates more to repairs, then it should be expensed to the ‘statement of profit or loss. If the expenditure is not correctly classified, profit and PPE could be under or overstated, The auditor should discuss with the management about the nature of this expenditure and make further testing to ensure that the classification of this, whether It is of capital nature or revenue nature.‘Audit and Assurance REVISION SUMMARY by House XXX has a material development expenditure In accordance with IAS 38 Intangible Assets, this should be included as an intangible asset. If management has not correctly accounted for the asset, intangible assets could be overstated. ‘The amortisation may be under- estimated. The auditor should take further testing to ensure that the classification in the financial statements is correct. Discuss with the management about the commencement of amortisation and recalculate the amortisation charge. TR valuation Receivables may be overvalued as they are not recoverable. Extended post year-end cash receipts testing and a review of the aged receivables ledger to be performed to assess valuation. Full YIE inventory count after YE If the adjustments are not completed accurately, then the year-end inventory could be under or overstated. Review inventory adjustments in detail and agreed to supporting documentation for all adjusting items. The audit team should increase the extent of inventory cut-off testing at the year end end at the date of the count Employees redundancy/legal action (unfair dismissal etc.) 3+1+1 Provision is an accounting estimate which requires additional attention. The valuation of provision may be understated or incorrect. Failure to recognise the provision will result in an understatement of provisions and expenses. Discuss with management the status of the supporting documents; if before the year end, review supporting documentation to confirm the timing. In addition, review the basis of and recalculate the provision.‘Audit and Assurance REVISION SUMMARY by House Loan: not yet or covenanted with lowest profit targets If XXX is unable to obtain the finance, it's going concern may be inappropriate. ‘Auditor should discuss with the management about the alternative source of finance. If XXX can-not obiain any, the appropriateness of going concern should be reviewed. Loan: borrowed from bank, repayable in X years. This loan needs to be correctly split between current and non-current liabilities in order to ensure correct disclosure. The split between current and non- current liabilities and the disclosures for this loan should be reviewed in detail such as repayment date to ensure classification of liability and compliance with relevant accounting standards. ‘Outsource to a service organisation A detection risk arises as to whether sufficient and appropriate evidence is available. Contro's over the X(t 411) cycle and balances at the year end. Consideration should be given to contacting the service organisation's auditor to confirm the level of controls in place. New system There is a risk of opening balances being misstated and loss of data if they have not transferred from old system correctly, Data transfer The auditor should undertake detailed testing to confirm that all opening balances have been correctly recorded in the new system. If any errors occurred during the transfer process, these could result in X(? {22 1) being under/overstated. Discuss with management the transfer Process undertaken and any controls putin place to ensure the completeness and accuracy of the data Undertake tests of controls to confirm the effectiveness of the transfer controls.‘Audit and Assurance REVISION SUMMARY by House Test of control summary Deficiencies Implication SE GR Recommendation No authorisation XX Not sequentially numbering Master file altered by clerk XX reconciliation not performed monthly This could result in unauthorised (1 Fees koe) Increase the risk of fraud and assets misappropriation. Documents may lost in the transit. ARTUR AR ke SP BON IRA es a) $0, GON lost may lead to unfulfilled orders and customer dissatisfaction, b) PO, GRN lost may lead to untimely procurement or even stock out. ¢) Inventory sheet lost may lead to incomplete counting records. ‘The amendment could be made incorrectly. Increase the risk of fraud. Error and fraud may not be identified in time. ‘All XXX transaction should be authorised by responsible officials. ‘Signature or mark shall be left as evidence. AL XXX AIDE BAG HE A) should be sequentially numbered and on a regular basis @ sequence check performed. Changes to master file data should be made by a supervisor or above, Each change should be reviewed by a responsible official. 0X should perform reconciliation at least once amonth, The recontiliations should be reviewed by a responsible official with relevant mark left such as signature, No segregation of duty Increase the risk of fraud and assets misappropriation due to inside job. Ashould perform B should perform =‘Audit and Assurance REVISION SUMMARY by House Summary of Substantive procedures Tangible non-current assets Asser | Audit Procedures Completeness Obtain a list of the non-current asset register, recalculate it and agree the total to the general ledger and financial statement and obtain |_ explanations for differences Fora sample of assets physically exist trace them to the non-current asset register. Existence Confirm that items inspected whether: + Non-current assets exist + Non-current assets are in use + Non-current assets are in good condition + Non-current assets have correct serial numbers Rights and obligations Verify ownership of property via inspection of title deeds, land registration documents, purchase invoices, contracts and lease agreements etc. Obtain a certificate from solicitors/bankers: ~ Stating purpose for which the deeds are being held (custody only) ~ Stating deeds are free from mortgage or lien. Examine invoices received after year-end, orders and board minutes for evidence of capital commitments. Component of ending balance Opening Bal + Additic + Revaluation Depreciation - Disposal Ending Bal‘Audit and Assurance REVISION SUMMARY by House Opening balance Completeness] Reconcile the non-current asset register with the opening position. Addition Select a sample of additions and agree cost (monetary amount) to Valuation | valid supporting documentation (supplier invoice/purchase contract etc) Existence | Seleet sample of additions recorded physically verfy them via site visits. Classification Review the list of additions and confirm that they relate to capital expenditure items rather than repairs and maintenance. Revaluation Agree the revalued amounts to the valuation statement provided by the valuer. Valuation | Consider reasonableness of valuation and the competence and -valuer capability of the valuer by assessing their independence, qualification, membership of a professional body, experience, scope of work, methods and assumptions used. Recalculate the total revaluation adjustment and agree correctly Valuation recorded in the revalua n surplus. Recalculate the depreciation charge for the year to ensure that for the assets revalued during the year, the depreciation was based on the correct valuation and was for 12 months. Depreciation Review depreciation policies for reasonableness by comparison to prior year, industry practices, if any inconsistency noted. Review depreciation policies including useful life and residual value according to past experience of gains and losses on disposal. Select a sample of assets recalculate the depreciation charge for the year and agree to the entity asset register. Disposal Completeness Occurrence Cast the list of disposals and agree the details to the non-current assets register. For a sample of disposals agree the sale proceeds to supporting documentation (such as sundry sales invoices etc.) and trace receipt of payment to the cash book and bank statements For major disposals inspect the board minutes for authorization/approval/consent of the sale. Accuracy Recalculate profits or losses on disposal and confirm that they have been correctly recorded.‘Audit and Assuranet # REVISION SUMMARY by House ais Presentation Complete the disclosure checklist to ensure that all the disclosures relevant to non-current assets have been made. Review the financial statements disclosures relating to the non-current assets to ensure they comply with IAS 16. Intangible non-current assets Audit tests criteria Audit Procedures Consider probability of future economic benefits (i.e. commercial P Viability) by inspecting market research results, advance orders, budgets and forecasts. Obtain representations from management of their intention to complete the intangible asset and either use or sell it. R Review cash flow forecasts to ensure that adequate resources exist to complete the project. Discuss any shortfalls with the directors fs Consider ability to sell or use the asset by inspecting market research results, advance orders, budgets and forecasts. + Discuss the technical feasibility with the company's engineers or technical staff. Review the accounting records to ensure that the expenditure can be : readily measured, e.g. separate cost center or nominal ledger code. Review invoices to verify materials expenditure on the project. Verify wages costs to supporting documentation such as time sheets. ‘Completeness Obtain and cast a schedule of intangible assets, agree the closing balances to the general ledger, trial balance and draft financial statements. Classification Valuation For those expensed as research, agree the costs incurred to invoices and supporting documentation and to inclusion in profit or loss. For those capitalised as development, agree costs incurred to invoices. Valuation -amortisation Discuss with the finance director the rationale for the ?-year useful life and consider its reasonableness. Recalculate the amortisation charge for a sample of intangible assets which have commenced production and confirm that it is in line with the amortisation policy of straight line over? years and that amortisation only commenced from the point of production. Disclosure Review the disclosures for intangible assets in the draft financial statements to verify that they are in accordance with IAS 38 Intangible Assets.‘Audit and Assurance REVISION SUMMARY by House Audit procedures for inventory Assertion Audit Procedures ‘Completeness, For the sample of inventory physically count trace them to Obtain a schedule of all raw materials, finished goods and work| in progress (WIP) inventory and cast to confirm completeness the balance and agree to trial balance and financial statements. inventory sheet. Select a sample of inventory from the inventory sheet and Existence perform physical count. Confirm that items inspected: -Quantities are correct “Are in good condition For third | Where inventory is held in third party locations, physically party inspect this inventory or review confirmations received from e/c the third party and match to the general ledger. Valuation According to IAS 2, inventories are required to be stated at the lower of cost and net realisable value (NRV). [IAS 2.9] Auditor should exam both cost and NRV of inventory for comparison. Valuation- Cost FG Select a representative sample of goods in inventory at the year-end, agree the cost per the records to: a) Raw material costs -Agree to supplier invoices Ensure FIFO or appropriate basis is being used ~Check quantities used WIP/FG b) Labour costs -Check calculations to supporting documentation (time sheets ‘or wage records) ¢ Overheads -Ensure only relevant production overheads included -Ensure based on normal levels of activity Wz hx 4s % wip PUREE FG MY ayb)c)+5e Ti Pte Discuss the basis of WIP valuation with management and assess its reasonableness. Raw material FGF RM cost ‘Agree to supplier invoices, ensure FIFO or appropriate basis is being used ingt Fin 3 2‘Audit and Assurance REVISION SUMMARY by House Valuation -NRV Analytical review of gross profit margin post year-end. If decreases may indicate that some inventory is being sold for less than cost. Calculate average inventory days for the current year and ‘compare to prior year inventory days. Discuss any significant variations with management Review aged inventory reports and identify any slow-mo goods, discuss with management why these items have not been written down or if an allowance is required. ‘Auditor should note down last year’s inventory for any indicator of inventory impairment. Valuation | Select a sample of year-end finished goods and review post -NRVFG | year-end sales invoices. Select a sample of items included in WIP at the year-end and Valuation | ascertain the final unit cost price, verifying to relevant -NRV WIP supporting documentation, and compare to the unit sales price included in sales invoices post year-end to assess NRV. Select a sample of GDNs around the year-end and trace to curost _Y2ar-end inventory balance Select a sample of GRNs around the year-end and trace to year-end inventory balance Complete the disclosure checklist to ensure that all the disclosures relevant to inventory have been made. Presentation Review the financial statements disclosures relating to inventory and WIP to ensure they comply with IAS 2 Inventories. 10Con be owsew® (aur ‘Audit and Assurance REVISION SUMMARY by House Attendance at the inventory count (a) Before (i) Planning Review the prior year audit files to identify whether there were any particular warehouses where significant inventory issues arose last year and familierise yourself with the inventories Determine arrangements (whether any of the warehouses this year are new, or have experienced significant control issues and decide which of the warehouses the audit team members will attend, basing this on materiality and risk of each site] with management in advance Inventories held by/for third parties - what arrangements have been made? Obtain a copy of the proposed inventory count instructions, review them to identify any control deficiencies and if any are noted, discuss them with management prior to the counts. Investigation of differences (where inventory records exist) Consider the need for an expert (ii) REVIEW OF INVENTORY COUNT INSTRUCTIONS ‘Supervision by senior staff Restriction and control of the production process and inventory movements during the count Teams of two counters, with one counting and the another checking or two independent counters Serial numbering, control and return of all inventory sheets Information to be recorded on the count records (location and identity, count units, quentity counted, conditions of items, stage reached in production process) Recording of last numbers of goods inwards and outwards records and of internal transfer records aObseve in pom ‘Audit and Assurance REVISION SUMMARY by House (b) During '* Observe the counting teams to confirm whether the inventory count instructions are being followed correctly. + Observe the procedures for movements of inventory during the count, to confirm that all movements have ceased * Inventories held by client for third parties: ensure excluded from count Inventory sheets being completed in ink and signed. * Confirm the procedures for identifying and segregating damaged goods are operating correctly, and assess inventory for evidence of any damaged or slow moving (old or obsolete) items. + Form an overall impression of inventory levels Select a sample of inventory and perform test counts. from inventory sheets to warehouse (existence) and from warehouse to inventory sheets(completeness). Identify and make a note of the last goods received notes(GRN) and goods dispatched notes(GDN) for year-end in order to perform cut-off procedures. Obtain a photocopy of the completed sequentially numbered inventory sheets for follow up testing on the final audit. Review WIP for stage of completion Discuss with the internal aucit supervisor how any raw materials quantities have been estimated. Where possible, reperform the procedures adopted by the supervisor. (c) After + Agree sequence of inventory sheets + Reperform client's computation of final figure * Trace own test count items through to final inventory summary + Inspect replies from third parties * Inform management of any problems + Follow up cut-off details + Reconcil tion with inventory records and investigation and correction of any differences 2‘Audit and Assurance REVISION SUMMARY by House Audit procedures for receivables Assertions _| Audit procedure Completeness | Obtaina list of trade receivable, recalculate it and agree the total tothe general ledger and Financial Statement. Compare the list of receivables with last year customer by customer and perform further investigation if material exception noted. Trace a sample shipping documentation (GDN, sales order) to sale invoices and into the sales and receivables’ ledger. Existence Select a sample of customer and send confirmation to them to verify the receivable balance at the year-end Select a sample of year-end receivable balances and trace to valid supporting order, dispatch note, GDN, invoice etc. Valuation Calculate average receivable days and compare this to prior year, investigate any significant differences. Select 2 sample of year-end receivable balances and trace to receipts notes post year-end. Inspect the aged receivables report to identify any slow-moving balances, discuss these with the management (such as credit control manager) to assess whether an allowance is necessary. For bad debts written off trace to valid supporting documentation (such as board minutes) to check if they are properly authorized. For bad debts written back (reversal) trace to valid supporting documentation (such as cash receipts note) to check if they are really settled. Cut-off Select a sample of GDNs around the year-end and trace to year-end receivables balance. Presentation | Complete the disclosure checklist to ensure that all the disclosures relevant to receivables have been made. 3‘Audit and Assurance REVISION SUMMARY by House Direct receivables confirmation procedure {a) Determining the information to be confirmed or requested; (b) Selecting the appropriate confirming party; {c) Designing the confirmation requests, Including determining that requests are properly ‘addressed and contain return information for responses to be sent directly to the auditor; and {d) Sending the requests, including follow-up requests when applicable, to the confirming party. {e) No reply: follow up by telephone or fax if there is no reply. + Confirmation of individual outstanding invoices + Alternative procedures. ~- Agree opening balance on account with last year’s closing balance. - Verify outstanding items to back up documentation, e.g. GDNs and customer orders (other than outstanding invoices) ~ Review cash received after year-end, ~ Discuss with responsible company offical. (f) Reply with no difference (g) Reply with differences + Mis-postings: The receivables ledger should be reviewed to identify any possible mis postings as this could be a reason for a response with a difference. + Timing difference (cash in transit): Any differences due to timing, such as cash in transit, should be agreed to post year-end cash receipts in the cash book. + Disputed amount: If any balances have been flagged as disputed by the receivable, then these should be discussed with management to identify whether a write down is necessary. Audit Plans for Bank S34: c Send confirmation to bank to verify all the bank balance at the year-end. Fonpviatie Examine the bank confirmation letter for details of any security provided by the company, review bank letter to ensure valid title to accounts held. al Obtain bank reconciliation sheet and verify the reconciliatior’s balance. (balance per bank book to bank book balance; balance per bank statement to bank confirmation) shat For reconciled items inspect valid supporting documentations: —Trace all of the outstanding lodgements to the pre-year-end cash book, post year-end bank statement and also to paying-in-book pre-year-end; —Trace all unpresented cheques through to a pre year-end cash book and post year-end statement. For any unusual amounts or significant delays obtain explanations irom management.” © Reviewthe cash book and bank statement for any unusual items or large transfers around the year-end, as this could be evidence of window dressing. © Complete the disclosure checklist to ensure that all the disclosures relevant to bank and ‘cash have been made. 4‘Audit and Assurance REVISION SUMMARY by House Sales revenue Audit procedures Assertions Audit procedures ‘APIN/A) ‘Compare the overall level of revenue against prior years and budgets and investigate any significant fluctuations. The level of sales over the year, compared on a month-by-month basis with the previous year, and investigate any significant fluctuations Classification of sales, compared according to classification of customer (wholesale/trade customer) and for any unusual movements discuss with management ‘Obtain @ schedule of sales for the year broken down into different categories (products: quantity; price; discount) and compare this to prior year and for any unusual movements discuss with the management. Compare the gross profit margin with previous year and investigate any significant fluctuations Completeness Obtain a listing of sales revenue from the sales ledger and agree the total to the general ledger and the financial statements to ensure completeness, Inspect a sample of sales orders, and agree these to the dispatch notes and sales invoices through to inclusion in the sales ledger to ensure completeness of revenue Occurrence Select a sample of sales transactions recorded in the sales ledger; agree the details back to a sales invoice, a goods despatched note (GDN) and customer order. ‘Accuracy Select a sample of sales invoices for larger customers and recalculate the discounts allowed to ensure that these are accurate. Select a sample of sales invoices and agree the sales prices back to the contracted rates to ensure the accuracy of invoices. Select a sample of sales invoices and recalculate that the totals and calculation of sales tax are correct. Cut-off Select a sample of despatch notes both pre and post year end; follow these through to sales invoices in the correct accounting period to ensure that cut-off has been correctly applied. Presentation Complete the disclosure checklist to ensure that all the disclosures relevant to revenue have been made and comply with IFRS 15. Sales returns AP Compare the sales return rate with previous year and investigate any significant fluctuations Cut-off/ Select a sample of sales return(credit notes raised), trace through to the Occurrence/ | original invoice and ensure the invoice has been correctly removed from Accuracy sales. 15‘Audit and Assurance REVISION SUMMARY by House Trade payables, accruals and expenses Assertions | Audit procedure Completenes | Obtain a list of trade payable, recalculate it and agree the total to the s general ledger and Financial Statement. Compare the list of trade payable with last year supplier by supplier and perform further investigation if material exception noted. Calculate average trade payable days and compare this to prior year, investigate any significant differences. y Existence _| Select a sample of supplier and send confirmation to them verify the payable balance at the year-end. Select a sample of year-end trade payable balances and trace to valid supporting invoices, GRN etc. ‘Accuracy Select a sample of purchase invoices, and examine the amount is accurate. Cut-off Select a sample of GRNs around the year-end and trace to year-end payable balance. Presentation | Complete the disclosure checklist to ensure that all the disclosures relevant to payable have been made. Seth BLL. Audit procedure for non-current liabilities open “4 Laarerest Assertions | Audit procedure Statement of financial position ~ balance Obtain breakdown of liabilities, compare to prior year audit Completeness | working papers and for any items no longer included agree to. Existence Obtain confirmation letters from lenders Rights& Review board minutes for evidence of any new borrowings which Obligations _| might not be recorded. Valuation Trace the repayment amount to the supporting documents, for example bank book, bank statement etc,, and ensure its amount is accurate. Classification | Agree that liabilities are correctly classified as current/non-current by reference to the repayment dates in the loan agreements. Income statement finance charge ‘Accuracy Recalculate finance charges agreeing interest rates to loan agreements. Agree capital and interest amounts to confirmation letters. 16‘Audit and Assurance REVISION SUMMARY by House Tests on provisions Provision Audit Procedure Present obligation Constructive obligation Discussion with the directors. Have they created a valid expectation in other parties that they will discharge the obligation? + Discuss with the directors as to whether they have formally announced their intention, to confirm that a present obligation exists at the year end. * If announced before the year end, review supporting documentation to verify that the decision has been formally announced. + Review evidence of past practices, published policies and statements made. Legal obligation Discuss with management the nature of the issue, to ensure that a full understanding of it is obtained and to assess whether an obligation exists. Review of correspondence and other documentation to assess whether the company has a present obligation as a result of a past event. Probable outflow Review the post year-end period to identify whether any payments have been made. Discuss the position with similar past provisions with the directors. Were these provisions eventually settled? Review board minutes and any company correspondence to ascertain whether it is probable that the payments will be paid by reviewing the supporting evidence. Write and send an enquiry letter to the company’s lawyers to obtain their views as to the probability of the claim being successful. Obtain a written representation from the directors to confirm the completeness of the provision, by confirming their view that the chances of a successful claim are remote and no provision or contingent liability is required Reliable estimate Obtain @ breakdown of the calculations and cast it to ensure completeness Recalculate the provision to confirm completeness and agree components of the calculation to supporting documentation. Review the level of prior year provisions with the amounts claimed to assess the reasonableness of management's forecasting. wv‘Audit and Assurance REVISION SUMMARY by House western Review any correspondence to assess whether the company has a reliable estimate of any potential payments can be made. The correspondences are letters and documents which are sent and received by solicitors, banks, customers, insurance company and suppliers both pre and post year-end. Review board minutes to assess whether any changes are required to the level of the provision as a result of an increased or decreased level of claims. Review the post year-end period to compare the level of claims actually made against the amounts provided and with any amount paid in the past for similar items and considering opinions given by independent experts. Presentation | Review the disclosure of the provision to ensure compliance with IAS (Provision) | 37 and review the adequacy of any disclosures made in the financial statements Presentation | In the event that it is not possible to estimate the amount of the (Contingent | provision, check that this contingent liability is disclosed in the liability) accounts in accordance with IAS 37. Presentation | For all material P&C obtain a written representation to confirm its completeness, 18‘Audit and Assurance REVISION SUMMARY by House Directors’ emoluments Assertions Audit Procedure Schedule of the directors’ remuneration Accuracy Obtain a schedule of the directors’ remuneration for each director and cast the schedule to ensure accuracy. Completeness The schedule should be split by salary and bonus paid + Monthly salary + Bonus * Other additional pay Completeness Obtain a written representation from management confirming, the completeness of directors’ remuneration including the bonus Payments records Completeness Completeness Verify the emoluments (monthly salary and the bonus) paid to directors during the year to their contracts of employment to ensure the directors’ entitlements to these amounts. ‘Agree a sample of the individual monthly salary andthe bonus to the payroll records Occurrence | Confirm the amount of monthly salary and each bonus paid by agreeing to the cash book and bank statements. Board minutes Obligations & | Review the board minutes to identify whether all additional rights payments are authorised ‘Accuracy ‘Agree the amounts paid per director to board minutes to ensure the sums included are genuine. Disclosure Presentation | Review the disclosures made regarding the directors’ remuneration and assess whether these are in compliance with local legislation. 19‘Audit and Assurance REVISION SUMMARY by House Key assertions——Capital Assertions Audit procedure Completeness Compare share capital with prior year. Issue new shares Existence /rights and obligations Review board minutes to confirm the issue of additional share capital during the year. ‘Agree the issue of shares is permitted from a review of any Existence statutory constitution agreements in place. Inspect the cash book and bank statements for evidence of, Existence : cash receipts from the share issue. Recalculate the split of proceeds between the nominal Accuracy value of shares and premium on issue and agree correctly recorded within share capital and share premium account. Review the disclosure of the share issue in the draft Presents financial statements and ensure it is in line with relevant accounting standards and local legislation. Dividend paid Existence /rights | Inspect board minutes for authorisation of dividend and obligations _| payment. Existence Agree dividend paid to cash book and bank statements. Accuracy Recalculate value of dividend paid. Review disclosure in the financial statements of dividends Presentation paid in year, 20‘Audit and Assurance REVISION SUMMARY by House Sales tax liability sf Be Accrual for employment tax payable ite TARTS BE — Compare the year-end sales tax: tothe prior [AP - Compare the accrual for employment tax IAP year balance or budget and investigate any significant payable to the prior year, investigate any differences significant differences — Agree the year-end sales tax liability in the tnal balance | ik-2A#2EH+R4# | — Agree the year-end employment tax payable |K- L#ick to the tax roturn/reconciliation submitted to the tax laccrual to the payroll records to confirm accuracy. authority and cast the return/reconeiliation. — Agree the quarterly sales tax charged equates to 158 of |H1SKH9RH | — Re-perform the calculation of the accrual fora [H#-T ABST the last quarters sales as per the sales day book. |sample of employees to contirm the accuracy. — Recalculate the sales taxincurred as per the [SASK | — Undertake a proof in total test for tho ean reconciliation is equal to 15% of the final quarter's lemployment tax accrual by mutiiplying the payroll |+ pputchases and expenses as per the purchase day book. Icost for June 20X9 with the appropriate tax ate. [control total — Recalculate the amount payable to the tax authority as |#4791% HLT |Compare this expectation to the actual accrual being sales tax charged less sales tax incurred. land investigate anv sianificant differences, — Agree the subsequent payment to the post year-end [RHE fHBERK |- Agree the subsequent payment to the post [RAMA AY ARBER cash book and bank statements to confirm completeness lyear-end cash book and bank statements to and that it has been paid in line wi 18 of the tax completeness. authority — Review any current and post year-end correspondence |Bt35 FRA — Review any correspondence with tax RE RRA with the tax authority to assess whether there are any lauthorities to assess whether there are any additional outstanding payments due. If so, confirm they ladditional outstanding payments due. If so, ate included in the year-end liability lconfirm they are included in the year-end accrual — Revew any disclosures made of the sales tax lability to RSE | Review any disclosures made of the sae ensure that it is shown as a current liability and assess whether disclosures are in compliance with accounting standards and leaislation, lemployment tax accrual and assess whether these lare in compliance with accounting standards and legislation. a‘Audit and Assurance REVISION SUMMARY by House BRRSB ‘Audit sk and its components, 1SA250 Non-compliance (direct&indirect) PM deiinition VFM audit Materiality calculation’ ‘Outsourcing the internal audit function ey ratio calculation Audit and relevant concepts Cycles of internal control ° CREST Components of an intemal control system [1 Corporate governance Practice Recording systems advacdis, 1 Audit committee(Responsibilties, acy & dis) Review and reporting ° ICPOP Subsequent Event (active duty) Saemak | 3 Conflict of interest Going concem indicators 1 Before accepting nomination ‘Audit procedures for going concern 3 Preconditions for an audit ‘Overall review of the financial statements | 2 ‘Audit engagement letter must & may include ‘Components of the auditor’ report 1 Engagement quality control review Flow charts 3 3 types of QC review’ KAM. 2 Monitering Modified opinion RLRAR 3 Audit planning and risk assessment Other examinable points 3 2 1 2 2 Siig the work of exper (Objectives of audit plan Interim and final audits Purpose of working paners Tuo tyoes of audit procedures (TOC & SP) ‘AEIOU Blelwfefmfaleolelol@lmlelrm]elelwelofel—|rm|ele 2