Provisions

Question 1

What are the procedures?

Answer 1

• Obtain a breakdown of the provisions, cast it and agree the figure to the financial statements - accuracy & presentation.
• Enquire with the directors or inspect relevant supporting documentation to confirm that a present obligation exists at the year-end - rights & obligations.
• Inspect relevant board minutes to ascertain whether payment is probable - existence.
• Recalculate the liability and agree components of the calculation to supporting documentation - completeness.
• Inspect post year-end bank statements to identify whether any payments have been made, compare actual payments to the amounts provided to assess whether the provision is reasonable - valuation.
• Inspect the financial statement disclosure of the provisions and contingent liabilities to ensure compliance with IAS 37 - presentation.
• Obtain a written representation from management that they believe the provisions and contingent liabilities are treated appropriately in the financial statements, are valued appropriately and are complete - valuation & completeness.