Directors' emoluments Flashcards
1
Q
How to test existence?
A
- Agree the directors’ emoluments disclosed in the financial statements to a schedule of directors’ emoluments for the year for each director. The schedule should show separately the individual components of emoluments: salary, bonuses, benefits, pension contributions and any other amounts such as ‘golden hellos’
- Vouch salary and pension contribution amounts to monthly payroll records and bank statements
- Vouch bonuses and any ‘one off’ payments to board meeting minutes and payroll records and bank statements
2
Q
How to test rights and obligations?
A
- Verify the emoluments paid to directors during the year to their contracts of employment to ensure the directors’ entitlements to these amounts
3
Q
How to test completeness?
A
- Review board meeting/ remuneration committee minutes to verify the amounts of any directors’ bonuses and any other amounts and also to check that these payments have been appropriately authorised
- Review the cash book during the year and in the post year end period and ensure any significant sums have been appropriately accounted for
- Ask directors to confirm in writing that the emoluments disclosed in the financial statements are complete and accurately recorded
- Adequately review the directors’ emoluments for each director in comparison to both the prior year emoluments and expected emoluments given the business’s activities during the year
4
Q
How to test accuracy, valuation and allocation?
A
- Re-cast the addition of the schedule of directors’ emoluments
- Verify that the amounts disclosed in the financial statements agree to this schedule
5
Q
How to test classification and presentation?
A
- Obtain a copy of the returns made to the tax authorities in respect of each director and verify that all benefits have been properly disclosed in the financial statements
- Review the adequacy of the disclosure in the directors’ emoluments note to ensure it is in accordance with applicable accounting standards and local law
