Prepayments

Question 1

How to test completeness?

Answer 1

1. Compare the level of prepayments to the previous year to ensure the figure is reasonable and complete
2. Review detailed statement of financial position to ensure all likely prepayments have been included

Question 2

How to test accuracy, valuation and allocation?

Answer 2

For a sample of prepayments from the prepayment listing, recalculate the amount prepaid to ensure that it has been accurately calculated

Question 3

How to test existence?

Answer 3

To verify by reference to invoices, cash book and correspondence