Intangible Non-Current Assets

Question 1

What are the sources of evidence?

Answer 1

• Invoices
• Timesheets
• Project Plan
• Project Trial Results
• License Agreement
• Cash Book / Bank Statements

Question 1

What is the key assertion?

Answer 1

Existence.

Question 2

What are the procedures with development costs?

Answer 2

• Obtain a breakdown of costs capitalised and agree the amount to the financial statements - valuation.
• For a sample of costs agree to invoice or timesheets - valuation.
• Inspect board minutes for discussions relating to the intended use of intangible assets - valuation.
• Discuss the details of the project with management to evaluate compliance with IAS 38 - existence.
• Inspect budgets to confirm financial feasibility - existence.
• Inspect project plans and other documentation to assess compliance with IAS 38 - existence.

Question 3

What are the procedures with other intangible assets e.g. patent royalites?

Answer 3

• Inspect purchase documents - existence, rights & obligations.
• Inspect specialist valuation reports and agree amounts to the general ledger and financial statements - valuation.

Question 4

What are the procedures with amortisation?

Answer 4

• Inspect to budgets/forecasts to ascertain in the period over which economic benefits are to be obtained - valuation.
• Recalculate the amortisation charge to verify accuracy - valuation.
• For intangibles such as licenses, inspect the agreement to confirm the amortisation period is consistent - valuation.
• Inspect the financial statement disclosures in the draft financial statements to ensure compliance with IAS 38.