Warranty Provision Flashcards
1
Q
Warranty provision
A
Risks:
- likely to be understated
- highly subjective
Procedures
- discuss basis of provision with management
- obtain managements workings and reperform calculations
- compare previous year’s provision to actual claims made to assess reliability as to managements estimates
- inspect customer correspondence to indentify complaints
- inspect claims, both pre and post year end to ascertain the level of complaints
- written representation stating that assumptions used in the calculations are reasonable
