Procedures

Question 1

Revenue procedures

Answer 1

• For a sample agree the contracted price to the revenue recognised
• trace the receipts over the year if they are degree income
• agree the cash receipts to the bank statement
• recalculate revenue
• trace deferred income to revenue
• discuss with directors the fall in revenue
• compare PY to see any unexpected value

Question 2

Intangible assets procedures

Answer 2

• inappropriate capitalisation
• inappropriate UL / amortisation rates
• consider if the intangibles meet the criteria to be capitalised
• ensure no research costs are capitalised
• vouch for any employee costs with timesheet
• recalculate the amortisation charge for a sample
• inspect managements impairment review. Review minutes for any indication of problems

Question 3

Ppe procedures

Answer 3

• inappropriate UL / depreciation rates, could be too complex and prone to error
• estimate of the residual value may be incorrect
• couch purchases invoices to employee timesheets
• ascertain from management the basis of the uk and consider it appropriate
• physically inspect a sample on the asset register
• recalculate depr
• compare depr charge to last year
• inspect management’s impairment review

Question 4

Trade receivables procedures

Answer 4

• perform direct confirmation of trade receivable balances and aged debt deficit
• inspect yea rend receivables and check for evidence of recoverability
• review correspondence with customer / legal advisors for evidence and any issue of non payment

Question 5

Trade payables procedures

Answer 5

• inspect invoices of suppliers to ascertain the credit term
• trace a sample of goods received at year end to ascertain whether the amount should be included
• trace payments made after year end
• request supplier information and perform reconciliation
  Where not available perform direct confirmation of trade payables