Risks/Procedures for AA

Question 1

Revenue

Answer 1

1. Sample GDNs pre and post year end and trace to revenue
2. Document the tests of controls and perform a walkthrough
3. Trace a sample of despatch notes, invoices and sales accounts

Question 2

Going Concern

Answer 2

1. Obtain written representation from management on the feasibility of future plans
2. Review bank correspondence and assess likelihood of breached covenants/loans
3. Inspect post year end management accounts

Question 3

PPE/NCA

Answer 3

1. Look at the fixed asset register and physically expect for existence
2. Determine any policies for depreciation, reperform calculations and see if reasonable
3. Obtain a breakdown of additions and disposals, cast and agree to samples

Question 4

Provisions

Answer 4

1. Inspect and legal correspondence for the likelihood of outcomes on legal claims
2. Compare provisions from prior year to see if estimates have been accurate
3. Inspect post year end bank statements for settlements after year end

Question 5

Receivables

Answer 5

1. Review correspondence with customers for evidence of bad debt
2. Obtain aged receivables report and review for unpaid unbalances
3. Perform a direct confirmation of balances with customers

Question 6

Payables

Answer 6

1. Enquire if there have been any changes to credit terms
2. Perform data analytics for three way matches
3. Inspect correspondence with suppliers for evidence of overdue amounts

Question 7

Inventory

Answer 7

1. Enquire as to any slow moving/obsolite/perishable/damaged inventory
2. Attend stock counts and observe procedures and controls
3. Reconcile quantities in post stock count stock listing

Question 8

Payroll

Answer 8

1. Enquire as to control regarding new/leaving employees
2. Recalculate gross salaries and deductions
3. Inspect correspondence with HMRC