Acronyms Flashcards
Why obtain customer balance? (receivables)
To agree to trade receivables balance in TB
Why get after-date cash receipts? (Receivables)
To follow through to year-end receivables balance
Why get a sample of GDN (Receivables)
Ensure recorded in correct accounting period
Why review post-year-end bank ledger and bank statements?
To identify whether payment has been made
Why obtain copy of a legal claim?
To understand basis for and the amount claimed
Why obtain a bank confirmation letter (bank loan)
Confirm the outstanding balance and agree to loan balance within FSs
Why obtain copy of loan documentation (bank loan)
Confirm amount borrowed and repayment terms
Why review loan agreement for details of covenant (bank loan)
Recalculate to identify if any breaches have occurred
Why obtain receipt of a loan?
Agree amounts to loan documentation and bank statements
Why recalculate a finance cost (loan)
To interest rate and amounts outstanding
Why obtain a useful life policy for PPE additions?
To confirm if amount of time is needed
How to confirm if training costs are expensed (NCA additions)
Confirm using a journal entry
Why recalculate depreciation charge? (NCA additions)
Confirm that calculations have been appropriately time-apportioned
Why obtain detailed breakdown of costs (NCA)
Confirm it is included in NCA register to ensure completeness
When question says bank balances?
Think bank reconciliation and it’s accessories
Why examine old unpresented cheques (bank balances)
To ensure they are written back
Where to agree bank ledger to (bank balances)
Year-end bank statement and bank confirmation letter
Why inspect correspondence from customer (legal claim)
Assess likelihood that customer will pay
Why reperform supplier statement reconciliations (payables)
Agree individual supplier balances and investigate any reconciling items
Why review journals entries processed for trade payables?
Correct misstatement of trade payables due to payment run
Which assertion does a payables circularisation relate to?
Completeness (useful to follow up on non-responses)
Which evidence should be provided for getting evidence of payment f or a legal claim?
Post-year-end bank statement
What sort of procedure is a proof-in-total calculation?
An analytical procedure
Why obtain credit notes (revenue)
To remove from revenue
Why cast a breakdown of revenue?
To agree to TB and FSs
Why select a sample of sales invoices? (Revenue)
To agree back to customer master data
Can GDNs confirm completeness of revenue?
Yes, by comparing to detailed sales listing in the FSs
Why recalculate invoice totals (revenue)
So it includes anu discounts and sales tax
Why obtain a proposed inventory count instructions? (inventory count)
Review any control deficiencies and discuss them with management prior to counts
What is important when deciding which warehouse to attend for an inventory count?
Determine which warehouse has the most materiality
Why obtain a copy of sequentially numbered inventory sheets?
To follow up testing at a final audit
Why select a sample of inventory sheets?
To perform tests counts from inventory sheets to physical inventory
Why observe an inventory count?
To ensure third-party inventory is removed and ensure inventory is in good working order
Rights and obligations procedure for NCA?
Confirm purchase price to supplier invoices
Why inspect bank ledger and bank statement (share issue)
Evidence of cash received from a share issue
If sum received less than when shares were issued?
Confirm difference is treated as share capital called up but not paid in FSs
Why agree all assets to non-current asset register?
To confirm existence
Why recalculate revaluation adjustment?
Agree correctly recorded in the revaluation surplus
When non-response with client’s permission? (confirmation)
Team should arrange to send a follow-up confirmation request
How to confirm amount from a balance owing for receivables?
Using after-date cash receipts and GDNs
How to test difference in cash in transit?
Agree to post-year-end cash receipts
Why obtain written representation from management (legal claim)
To confirm the likelihood of a lawsuit
When assessing the adequacy of a disclosure. What should it relate to?
An accounting standard
What can post-year-end cash receipts be used for in receivables?
What debt was recovered by the audit completion date
When should standard cost cards be agreed to?
Raw materials
Labour costs
Overheads allocated
When to get an inventory listing?
Agree to inventory records
Purchases invoices are compared to what in inventory?
Raw materials
Time sheets are compared to what in inventory?
Wage records
Why review post-year-end sales invoices (inventory)
To assess if NRV is above cost. Determine if adjustment is required
Why obtain and cast an inventory listing?
To agree total to inventoruy records
Agree quantity of products shown at year end to what? (inventory)
Inventory count records
What are cost cards for in inventory?
Finished goods
Why review post-year-end payments for damage settlements?
To assess reasonableness of the provision
When should an allowance be provided for receivables?
If it unlikely they will be recovered
Why obtain a schedule of income?
To trace to TB
What should be done to sample donations? (income)
Trace to bank statements and income ensuring they are recorded completely and accurately
Substantive procedure for deferred income?
Make sure it is excluded from current income and instead recognised as deferred income
Why obtain a breakdown of a restructuring provision?
Confirm only direct expenditure relating to restructuring is included
Should written representation be obtained for a restructuring provision?
Yes, as it is subjective
Should retraining costs be included in a restructuring provision?
No
Why review post-year-end payments (provisions)
To assess whether provision is reasonable
When a bank loan is repaid early?
There are early settlement charges
Where to agree loan proceeds?
To bank ledger account and bank statements
How to agree oprning and closing balances of loans?
Cast schedule to confirm accuracu and agree TB and draft FSs
What can a registration number of a vehcile be used for?
Agree to non-current asset register
Where to agree cash payment (vehicle additions)
To bank ledger account and bank statement
Why discuss with management a vehicle’s useful life
To determine if vehicles are being used for their entire period
If difference due to cash in transit, where should it be agreed to?
Post-year-end cash receipts
If difference due to goods in transit, where should it be agreed to?
Pre-year-end GDN
Why review customer correspondence for receivables?
Assess likelihood of payment
Why obtain cash forecast (going concern)
If company has sufficient cash flow
Directors and going concern?
Important to get their opinion through written representation
What documents are needed to trace inventory items (goods and WIP)?
Obtain relevant cost sheets to agree to PI, time sheets, etc
Why are post-year-end sales invoices useful?
To determine if NRV is above cost
Why obtain post-year-end credit notes for WIP inventory?
Could signify write down is required
Why obtain a schedule of intainglbe assets?
To cast and agree to general ledger, TB and FSs
Market research reports for intangible assets?
Probable future economic benefits arise
How to agree expensed as research and capitalised as development?
To invoices
Why review feasibility reports for intangible assets>
Confirm technical feasibility and intention to complete the project
What is a sales tax liability?
A current liability
How to calculate sales tax liability?
Sales tax charged - sales tax incurred
How to review any additional outstanding payments due to a tax authority?
Any current and post-year-end correspondence
Where to compare a sales tax liability?
To prior year balance and investigate any differences
Which document is individual bonus payments agreed to?
Payroll records
How to confirm amount of bonus paid?
To bank ledger and bank statements
Why perform proof-in-total for depreciation charge?
Discuss with management if significant fluctuations arise
Which standard is depreciation included in?
IAS 16
How to check if new rates of depreciation have been applied?
Through non-current asset register
Why obtain a breakdown of asset categories for depreciation?
For comparison and discussion with management
Why review asset expenditure budgets for dpereciation?
So revised asset lives correspond with the planned period
Receivables and rights and obligations assertion?
Review bank confirmations and loan agreements for evidence that receivables have been assigned as security for company
What to discuss with directors in a redundnacy provision?
Confirm their intention and whether a present obligation exists at year end
Why recalculate a redundancy provision?
To ensure components of calculation to supporting documentation such as employee contracts
Is consent required for a receivables circulisation?
Yes, usually from FD
Why review after-date invoices and credit notes for trade payables and accruals?
To ensure no further items need to be accrued
Post-year-payments and trade payables accruals used for>
Ensuring recording in correct period
Where to confirm amount from legal claim?
Post-year-end bank ledger and bank statement. Confirm if the provision is reasonable through actual payment
How should receipt of bank loan be confirmed?
Bank ledger account and bank statement
What should be referenced when recalculating finance cost?
Reference to amounts outstanding during year
How to confirm rights and obligations?
Agree to supplier invoices
Why recalculate depreciation?
For time apportion
Where should bank confirmation letter amount be agreed to?
Bank reconciliation and bank ledger account
Where should outstanding lodgments be agreed to?
Pre-year-end bank ledger and post-year-end bank statements
Which document provides evidence for a share issue?
Bank statement and ledger for evidence of cash received
Why recalculate share issue?
Ensure correctly recorded in share capital and share premium
Post-year-payments at restructuring provisions?
Used to assess reasonableness
What are asset expenditure budgets useful for in depreciation?
To assess whether there are any plans to replace equipment
How to confirm reasonableness of a depreciation rate?
Through industry average
Where should all bank accounts be included on?
The TB
