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Substantive Procedures 3 - Coggle Diagram
Substantive Procedures 3
Development
General
-IAS38 met?
-Obtain schedule of capitalised costs
-O/B and C/B
-VAT
-Deferred Tax
-Mgmt. rep letter
Expenditure
-For a sample of costs agree amounts to supporting docs;
•Materials to invoices
•EE costs to payroll
•Overheads to GL
•Ext. costs to invoice
-Costs are correctly capitalised to development and not research
-Consult expert
-Review basis on which overheads are allocated
-Re-perform calcs
Amortisation
-Enquire of mgmt. about estimates used, UL & RVs
-Re-perform calcs
-Expert
Impairment
-Determine & review VIU, FVLCTS, RA>CA
Goodwill
Existence & Rights
-Does client have control over entities
-Inspect purchase documentation
-Inspect acquired entity's AFS & verify PV is > NAV
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Calculations
-Purchase docs too verify purchase price
-Transaction costs have been excluded from consideration paid
-Re-perform calcs
-Have all assets & liabilities been taken into account
-Have they been measured at fair value
-Expert valuations of FV
Inventory
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Rights & Obligations
-Is inventory held on consignment
-Verify consignment/in-transit stock is not included on-hand
Manufactured Goods
-Inspect docs for evidence of transfer of RM to WIP
-Authorisations on docs
-Reperform calcs of unit cost
-Labour hrs to payroll docs
-Ensure non-man costs are not included
-Reperform calcs of FMOH
Goods Purchased Locally
-Vat is excluded
-Transport costs excluded
-All costs included correctly
-Re-calculate unit costs
-WAC/FIFO
Imported Inventory
-Sample high value items
-Import & customs duties included in cost
-Correct exchange rate
-Trace to invoices
Going Concern
Liquidity
-Competence of people generating cash flows
-Consider appropriateness of any assumptions made
-Re-perform calcs
-Mgmt. rep letter
Loan Obligations
-Bank confirmations regarding borrowings
-Re-perform calc on short-term & long-term portions of loans
-Schedule of repayments
-Recalculate repayments
-Reperform interest calculations
Subordination of Loans
-Enquire from mgmt. if this is occurring
-Assumptions are appropriate
-Is this a viable option?
Third Parties
-Confirmation of third parties
-Consider their ability to offer support (Inspect their AFS)
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Treasury
Existence, Rights & Obligations
-Terms & Conditions
-Inspect nature of rights & obligations
-Evidence of authorisation
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Valuation & Accuracy
-Valuation models too determine FV
-Appropriateness of assumptions made
-Re-perform calcs
-Appropriateness of discount rates
-Independent expert
-Consider any indicators of impairment
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