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Interpretation and Application of International Standards on Auditing

Book Description

Written by Steven Collings, winner of Accounting Technician of the Year at the British Accountancy Awards 2011, this book deals with the significant changes auditing has undergone in recent years, due in large part to well-publicised corporate disasters such as Enron and Parmalat, which have shaken the profession. In response, many countries have replaced pre-existing domestic standards with International Standards on Auditing (ISAs) in an attempt to ensure that auditors throughout the world apply the same level of standards during all audit assignments, and that audit quality remains consistent on a global basis.

International Standards on Auditing are frequently updated to improve and clarify their application throughout the audit and accounting profession. They can be extremely complex and difficult to apply in real life situations. It is essential to apply the standards with sufficient rigor to enable an efficient audit to take place, to satisfy the regulators and ensure that the client receives and audit which is beneficial, cost effective, and which conforms to the prescribed framework; however, auditors are often criticised for failing to do so.

Recognising that auditing is not always an exact science, and that in many cases the auditor is called upon to make a judgement in situations open to differing opinions, this book takes a practical and pragmatic approach to following International Standards on Auditing. Steve Collings looks at the full ISAs in their final form, as reissued following the IAASB 'Clarity Project', and give auditors guidance on how to interpret and apply them in real life situations. Each redrafted or rewritten ISA is dealt with in a separate chapter, containing case studies and illustrative examples. The book also covers the regulatory framework of auditing and gives a summary of the five ethical standards applicable to auditors, as mapped by the IAASB. Detailed appendices provide an overview of IFRS and IAS, illustrative audit tests and illustrative financial statements.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Preface
  5. Acknowledgements
  6. About the Author
  7. Chapter 1: The History of Auditing
    1. RISK-BASED AUDITING
    2. REGULATION
    3. INTERNAL AND EXTERNAL AUDITING
    4. ASSURANCE ENGAGEMENT
    5. FEATURES OF AN AUDIT
    6. INDEPENDENCE
  8. Chapter 2: The Clarity Project
    1. ISA 600 (revised and redrafted) The Audit of Group Financial Statements
    2. ISA 550 (revised and redrafted) Related Parties
    3. ISA 540 (revised and redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures
    4. ISA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
    5. ISA 450 Evaluation of Misstatements Identified During the Audit
    6. ISA 530 Audit Sampling
    7. ISA 260 Significant Difficulties
    8. ISA 570 Going Concern
    9. Auditor’s Reports
  9. Chapter 3: The Code of Ethics for Professional Accountants
    1. FUNDAMENTAL PRINCIPLES
    2. THREATS AND SAFEGUARDS
    3. SAFEGUARDS
    4. ACCEPTING AN AUDIT CLIENT
    5. CONFLICTS OF INTERESTS
    6. FEES
    7. GIFTS AND HOSPITALITY
    8. CLIENT ASSETS
    9. FAMILY AND CLOSE RELATIONSHIPS
    10. NON-AUDIT SERVICES PROVIDED TO THE CLIENT
  10. Chapter 4: ISA 200 (revised and redrafted) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing
    1. THE AUDIT OF FINANCIAL STATEMENTS
    2. FINANCIAL STATEMENT RISK AND DETECTION RISK
    3. AUDITING IN ACCORDANCE WITH ISAs
    4. ISA CONTENT
  11. Chapter 5: ISA 210 (redrafted) Agreeing the Terms of Audit Engagements
  12. Chapter 6: ISA 220 (redrafted) Quality Control for an Audit of Financial Statements
    1. CONTINUING AUDITS
    2. THE ENGAGEMENT TEAM
    3. REVIEW
    4. DIFFICULT AND CONTENTIOUS MATTERS
    5. QUALITY CONTROL REVIEW
    6. ‘HOT’ AND ‘COLD’ REVIEWS
  13. Chapter 7: ISA 230 (revised) Audit Documentation
    1. ASSEMBLY
    2. SIGNIFICANT MATTERS
    3. DEPARTURES FROM THE REQUIREMENTS OF ISAs
  14. Chapter 8: ISA 240 (redrafted) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
    1. RESPONSIBILITIES
    2. DISCUSSION AMONGST THE ENGAGEMENT TEAM
    3. RISK ASSESSMENT
    4. CHARACTERISTICS OF FRAUD
    5. AUDIT TESTING
    6. FRAUD IN RELATION TO REVENUE RECOGNITION
    7. PROCEDURES ON REVENUE RECOGNITION
    8. COMMUNICATION OF FRAUD MATTERS
  15. Chapter 9: ISA 250 (redrafted) Consideration of Laws and Regulations in an Audit of Financial Statements
    1. THE AUDITOR’S CONSIDERATIONS
    2. NON-COMPLIANCE WITH LAWS AND REGULATIONS
    3. AUDIT OPINION ON THE FINANCIAL STATEMENTS CONCERNING NON-COMPLIANCE
    4. CHARACTERISTICS OF NON-COMPLIANCE WITH LAWS AND REGULATIONS
    5. RIGHTS AND DUTIES TO REPORT TO REGULATORS IN THE FINANCIAL SECTOR
  16. Chapter 10: ISA 260 (revised and redrafted) Communication with Those Charged with Governance
    1. SUBGROUPS
    2. COMMUNICATION OF MATTERS PRIOR TO THE AUDIT
    3. COMMUNICATION OF AUDIT FINDINGS
  17. Chapter 11: ISA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
    1. DEFICIENCIES IN INTERNAL CONTROLS
    2. AUDITOR RESPONSIBILITIES
  18. Chapter 12: ISA 300 (redrafted) Planning an Audit of Financial Statements
    1. PRELIMINARY ENGAGEMENT ACTIVITIES
    2. PLANNING ACTIVITIES
    3. AUDIT STRATEGY
    4. THE AUDIT PLAN
    5. DIRECTION, SUPERVISION AND REVIEW
    6. DOCUMENTATION
    7. COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE AND MANAGEMENT
  19. Chapter 13: ISA 315 (redrafted) Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment
    1. RISK ASSESSMENT
    2. NATURE OF THE ENTITY
    3. ACCOUNTING POLICIES
    4. OBJECTIVES AND STRATEGIES AND RELATED BUSINESS RISKS
    5. MEASUREMENT AND REVIEW OF FINANCIAL PERFORMANCE
    6. INTERNAL CONTROLS
    7. INFORMATION TECHNOLOGY
    8. ASSESSING THE RISKS OF MATERIAL MISSTATEMENT
    9. APPENDIX TO ISA 315 ILLUSTRATIVE PLANNING NOTES
  20. Chapter 14: ISA 320 (revised and redrafted) Materiality in Planning and Performing an Audit
  21. Chapter 15: ISA 330 (redrafted) The Auditor’s Responses to Assessed Risks
  22. Chapter 16: ISA 402 (revised and redrafted) Audit Considerations Relating to an Entity Using a Service Organisation
  23. Chapter 17: ISA 450 (revised and redrafted) Evaluation of Misstatements Identified during the Audit
    1. FACTUAL MISSTATEMENTS
    2. JUDGEMENTAL MISSTATEMENTS
    3. PROJECTED MISSTATEMENTS
    4. ANOMALOUS ERROR
    5. EVALUATING THE EFFECT OF UNCORRECTED MISSTATEMENTS
    6. PRIOR PERIOD UNCORRECTED MISSTATEMENTS
    7. COMMUNICATION
    8. WRITTEN REPRESENTATIONS
    9. DOCUMENTATION
  24. Chapter 18: ISA 500 (redrafted) Audit Evidence
    1. METHODS OF OBTAINING AUDIT EVIDENCE
    2. AUDIT PROCEDURES AND THE FINANCIAL STATEMENT ASSERTIONS
    3. RECURRING AUDITS
    4. USE OF MANAGEMENT REPRESENTATIONS AS AUDIT EVIDENCE
    5. THE USE OF EXPERTS AS AUDIT EVIDENCE
    6. EVALUATING THE EXPERT’S WORK FOR AUDIT EVIDENCE
    7. SELECTION AND SAMPLING TECHNIQUES
    8. DOCUMENTATION AND WORKING PAPERS
    9. REVIEW
  25. Chapter 19: ISA 501 (redrafted) Audit Evidence — Specific Considerations for Selected Items
    1. INVENTORY
    2. LITIGATION AND CLAIMS
    3. SEGMENT INFORMATION
  26. Chapter 20: ISA 505 (revised and redrafted) External Confirmations
    1. REFUSAL
    2. OVERALL EVALUATION
  27. Chapter 21: ISA 510 (redrafted) Initial Audit Engagements — Opening Balances
    1. RECURRING AUDITS
    2. INITIAL ENGAGEMENTS
    3. LACK OF AUDIT EVIDENCE TO SUPPORT OPENING BALANCES
  28. Chapter 22: ISA 520 (redrafted) Analytical Procedures
    1. ANALYTICAL PROCEDURES AT THE PLANNING STAGE
    2. RELIANCE ON ANALYTICAL PROCEDURES
    3. INVESTIGATING THE RESULTS OF ANALYTICAL PROCEDURES
    4. ANALYTICAL PROCEDURES AS AN OVERVIEW AT THE END OF THE AUDIT
    5. PRACTICAL TECHNIQUES
    6. SUGGESTED TESTS
  29. Chapter 23: ISA 530 (redrafted) Audit Sampling
    1. AUDIT SAMPLING
    2. SAMPLING RISK
    3. SETTING THE SAMPLE SIZE
    4. SAMPLE SELECTION
    5. EVALUATION OF AUDIT SAMPLING
    6. FACTORS THE AUDITORS SHOULD CONSIDER
  30. Chapter 24: ISA 540 (revised and redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures
    1. AT THE PLANNING STAGE
    2. REVIEW AND TESTING PROCESS
    3. DEPRECIATION AND AMORTISATION
    4. BIAS
    5. SUBSEQUENT EVENTS
    6. EVALUATION OF AUDIT PROCEDURES
    7. AUDITING FAIR VALUE MEASUREMENTS AND DISCLOSURES
    8. SUBSEQUENT EVENTS
    9. FAIR VALUE DISCLOSURES
    10. RESULTS OF AUDIT PROCEDURES
  31. Chapter 25: ISA 550 (revised and redrafted) Related Parties
    1. EXAMPLES OF AUDIT PROCEDURES REGARDING RELATED PARTIES
    2. INDICATORS OF EVIDENCE OF RELATED PARTIES
    3. IDENTIFIED RELATED PARTY TRANSACTIONS
    4. DISCLOSURE IN THE FINANCIAL STATEMENTS
    5. MANAGEMENT REPRESENTATION
    6. ULTIMATE CONTROLLING PARTY
    7. AUDIT REPORTING
    8. COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE
  32. Chapter 26: ISA 560 (redrafted) Subsequent Events
    1. AUDIT PROCEDURES ON SUBSEQUENT EVENTS PRIOR TO THE DATE OF THE AUDITOR’S REPORT
    2. SUBSEQUENT EVENTS DISCOVERED AFTER THE DATE OF THE AUDITOR’S REPORT BUT BEFORE THE FINANCIAL STATEMENTS ARE ISSUED
    3. FINANCIAL STATEMENTS AMENDED BEFORE ISSUE BUT AFTER THE DATE OF THE AUDITOR’S REPORT
    4. ADJUSTING AND NON-ADJUSTING EVENTS
  33. Chapter 27: ISA 570 (redrafted) Going Concern
    1. GOING CONCERN PRESUMPTION
    2. PERIOD COVERED BY THE ASSESSMENT OF GOING CONCERN
    3. PRELIMINARY ASSESSMENT
    4. EVALUATION OF MANAGEMENT’S ASSESSMENT OF GOING CONCERN
    5. SUFFICIENT AND APPROPRIATE AUDIT EVIDENCE
    6. BORROWING FACILITIES
    7. AUDIT PROCEDURES WHEN EVENTS OR CONDITIONS ARE IDENTIFIED
    8. INFORMATION SYSTEMS
    9. REPORTING
  34. Chapter 28: ISA 580 (revised and redrafted) Management Representations
    1. MANAGEMENTS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
    2. REPRESENTATIONS BY MANAGEMENT TO BE USED AS AUDIT EVIDENCE
    3. DOCUMENTATIONS OF REPRESENTATIONS BY MANAGEMENT
    4. DOUBTS CONCERNING THE RELIABILITY OF WRITTEN REPRESENTATIONS AND WRITTEN REPRESENTATIONS NOT PROVIDED
  35. Chapter 29: ISA 600 (revised and redrafted) Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors)
    1. CONSOLIDATION PROCESS
    2. ACCEPTANCE AS GROUP ENGAGEMENT PARTNER
    3. OBTAINING AN UNDERSTANDING OF THE GROUP, ITS COMPONENTS AND THE ENVIRONMENT IN WHICH THEY OPERATE
    4. MATERIALITY
    5. SUBSEQUENT EVENTS
    6. CONSOLIDATING SUBSIDIARIES REPORTING UNDER ALTERNATIVE GAAP
    7. COMMUNICATION
    8. PROCEDURES FOR PLANNING AND UNDERTAKING GROUP AUDITS
    9. PROCEDURES FOR COMPLETION OF GROUP AUDITS
  36. Chapter 30: ISA 610 (redrafted) Using the Work of Internal Auditors
    1. RELATIONSHIP BETWEEN INTERNAL AND EXTERNAL AUDITORS
    2. ROLE OF INTERNAL AND EXTERNAL AUDITORS
    3. OBTAINING AN UNDERSTANDING OF INTERNAL AUDITING
    4. COMMUNICATION
    5. DOCUMENTATION
  37. Chapter 31: ISA 620 (revised and redrafted) Using the Work of an Auditor’s Expert
    1. APPOINTMENT OF AN EXPERT
    2. EVALUATING THE WORK OF AN AUDITOR’S EXPERT
    3. COMMUNICATION
  38. Chapter 32: ISA 700 (revised) Forming an Opinion on the Financial Statements
    1. CONTENTS OF AN ISA STYLE AUDITOR’S REPORT
    2. UNQUALIFIED (UNMODIFIED) OPINION
    3. MATTERS THAT DO NOT AFFECT THE AUDITOR’S OPINION
    4. MATTERS THAT DO AFFECT THE AUDITOR’S OPINION
    5. QUALIFIED OPINION
    6. ADVERSE OPINION
    7. DISCLAIMER OF OPINION
  39. Chapter 33: ISA 705 (revised and redrafted) Modifications to the Opinion in the Independent Auditor’s Report
    1. QUALIFIED OPINION
    2. DISAGREEMENT
    3. ADVERSE OPINION
    4. DISCLAIMER OF OPINION
    5. COMMUNICATION
  40. Chapter 34: ISA 706 (revised and redrafted) Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs in the Independent Auditors’ Report
    1. EMPHASIS OF MATTER PARAGRAPHS
    2. OTHER RELEVANT ISAs
  41. Chapter 35: ISA 710 (redrafted) Comparative Information — Corresponding Figures and Comparative Financial Statements
    1. OBTAINING AUDIT EVIDENCE CONCERNING OPENING BALANCES
    2. SUGGESTED TESTS FOR OBTAINING SUFFICIENT APPROPRIATE AUDIT EVIDENCE CONCERNING OPENING BALANCES
  42. Chapter 36: ISA 720 (redrafted) The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
    1. OTHER INFORMATION
    2. INCONSISTENCY
    3. MISSTATEMENT OF FACT
    4. MATERIAL INCONSISTENCIES AND MATERIAL MISSTATEMENTS OF FACT
    5. AMENDMENTS
  43. Chapter 37: ISA 800 (revised and redrafted) Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
    1. REPORTING
    2. ACCEPTANCE OF THE ENGAGEMENT
    3. PLANNING AND UNDERTAKING THE AUDIT OF AN ENTITY THAT HAS PREPARED THEIR FINANCIAL STATEMENTS UNDER A SPECIAL PURPOSE FRAMEWORK
    4. FORMING AN OPINION
    5. EMPHASIS OF MATTER PARAGRAPHS
  44. Chapter 38: ISA 805 (revised and redrafted) Special Considerations — Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement
    1. AUDITING A SINGLE FINANCIAL STATEMENT OR SPECIFIC ELEMENT
    2. PLANNING
    3. REPORTING
    4. ADVERSE OR DISCLAIMER OF OPINION
  45. Chapter 39: ISA 810 (revised and redrafted) Engagements to Report on Summary Financial Statements
    1. ACCEPTANCE
    2. UNACCEPTABLE APPLIED CRITERIA OR UNOBTAINABLE MANAGEMENT AGREEMENT
    3. AUDIT PROCEDURES
    4. REPORTING
    5. MODIFIED OPINIONS
    6. ADVERSE OR DISCLAIMER OF OPINIONS
    7. DISTRIBUTION
    8. COMPARATIVES
    9. UNAUDITED SUPPLEMENTARY INFORMATION
    10. OTHER INFORMATION WITHIN SUMMARY FINANCIAL STATEMENTS
    11. TIMING AND SUBSEQUENT EVENTS
    12. AUDITOR ASSOCIATION
  46. Chapter 40: The Framework for the Preparation and Presentation of Financial Statements
    1. THE OBJECTIVES
    2. THE UNDERLYING ASSUMPTIONS
    3. THE QUALITATIVE CHARACTERISTICS
    4. THE ELEMENTS OF FINANCIAL STATEMENTS
    5. THE CONCEPTS OF CAPITAL AND CAPITAL MAINTENANCE
  47. Chapter 41: IFRS for Small and Medium Entities (SMEs)
    1. SMALL–MEDIUM ENTERPRISE
    2. FALL BACK TO FULL IFRS
    3. COMPLIANCE WITH IFRS FOR SMEs
    4. EXCEPTIONS TO THE RETROSPECTIVE APPLICATION OF OTHER IFRSS
    5. FULL-COST OIL AND GAS ASSETS
    6. DETERMINING WHETHER AN ARRANGEMENT CONTAINS A LEASE
    7. OPTIONAL EXEMPTIONS FROM THE BASIC MEASUREMENT PRINCIPLES IN IFRS 1
    8. IFRS FOR SMEs VERSUS UK GAAP
    9. INVESTMENT PROPERTIES
    10. FIXED ASSET REVALUATION
    11. BORROWING COSTS
    12. INTANGIBLE ASSETS — DEVELOPMENT COSTS
    13. GOODWILL AND INTANGIBLE ASSETS
    14. REVALUATION OF INTANGIBLE ASSETS
    15. LEASES
    16. BUSINESS COMBINATIONS
    17. REVENUE RECOGNITION
    18. DEFERRED TAXATION
    19. ASSOCIATES AND JOINT VENTURES (CONSOLIDATED FINANCIAL STATEMENTS)
    20. DEFINED BENEFIT PENSION SCHEMES
    21. STOCK (INVENTORY) VALUATION
    22. ACCOUNTING POLICIES
    23. AGRICULTURE
    24. SUBSIDIARY UNDERTAKINGS
    25. FINANCIAL INSTRUMENTS
    26. DERECOGNITION OF A FINANCIAL INSTRUMENT
    27. DERIVATIVES
    28. HEDGE ACCOUNTING
    29. DIVIDENDS FROM ASSOCIATES AND JOINT VENTURES
    30. PROPERTY, PLANT AND EQUIPMENT
    31. NEGATIVE GOODWILL
    32. MEASUREMENT OF SHARES
  48. Chapter 42: ISQC 1 ‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements’
    1. LEADERSHIP RESPONSIBILITIES FOR QUALITY CONTROL WITHIN THE AUDIT FIRM
    2. RELEVANT ETHICAL REQUIREMENTS
    3. ACCEPTANCE AND CONTINUANCE OF CLIENT RELATIONSHIPS AND SPECIFIC ENGAGEMENTS
    4. HUMAN RESOURCES
    5. ENGAGEMENT PERFORMANCE
    6. MONITORING
  49. Appendix 1: Overview of IFRS and IAS
    1. IFRS 1 ‘FIRST-TIME ADOPTION OF IFRS’
    2. EXEMPTIONS
    3. DISCLOSURE
    4. IFRS 2 ‘SHARE-BASED PAYMENT’
    5. IFRS 3 ‘BUSINESS COMBINATIONS’
    6. DISCLOSURE REQUIREMENTS
    7. AMENDMENTS TO IFRS 3
    8. IFRS 4 ‘INSURANCE CONTRACTS’
    9. IFRS 5 ‘NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS’
    10. DISCONTINUED OPERATIONS
    11. IFRS 6 ‘EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES’
    12. IFRS 7 ‘FINANCIAL INSTRUMENTS: DISCLOSURE’
    13. QUALITATIVE DISCLOSURES
    14. QUANTITATIVE DISCLOSURES
    15. IFRS 8 ‘OPERATING SEGMENTS’
    16. IFRS 9 ‘FINANCIAL INSTRUMENTS’
    17. INITIAL RECOGNITION OF FINANCIAL ASSETS
    18. THE BUSINESS MODEL FOR RECOGNITION OF FINANCIAL ASSETS
    19. WITHDRAWAL OF OTHER TYPES OF FINANCIAL ASSET
    20. EMBEDDED DERIVATIVES
    21. OPTION TO RECOGNISE AT FAIR VALUE
    22. RECLASSIFICATION
    23. INVESTMENTS IN EQUITY INSTRUMENTS
    24. MEASUREMENT
    25. IMPAIRMENT
    26. CHANGES IN FAIR VALUE OF FINANCIAL ASSETS
    27. FINANCIAL LIABILITIES
    28. IAS 1 ‘PRESENTATION OF FINANCIAL STATEMENTS’
    29. GOING CONCERN
    30. ASSESSING GOING CONCERN
    31. BUDGETS AND FORECASTS
    32. SENSITIVITY ANALYSIS AND ‘STRESS-TESTING’
    33. BORROWING FACILITIES
    34. CONTINGENT LIABILITIES
    35. PRODUCTS AND SERVICES
    36. TIMING OF CASH FLOWS
    37. PERIOD OF REVIEW
    38. DISCLOSURES
    39. NO MATERIAL UNCERTAINTIES
    40. MATERIAL UNCERTAINTIES BUT THE GOING CONCERN BASIS IS APPROPRIATE
    41. GOING CONCERN BASIS IS INAPPROPRIATE
    42. OFFSETTING
    43. ACCOUNTING POLICIES
    44. IAS 2 ‘INVENTORY’
    45. COST
    46. VALUATION
    47. NET REALISABLE VALUE
    48. IAS 7 ‘STATEMENT OF CASH FLOWS’
    49. DIRECT AND INDIRECT METHOD
    50. BASIS OF PREPARATION
    51. IAS 8 ‘ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS’
    52. ACCOUNTING POLICIES
    53. CHANGES IN ACCOUNTING POLICY
    54. CHANGES IN ESTIMATION TECHNIQUES
    55. ERROR
    56. IAS 10 ‘EVENTS AFTER THE REPORTING PERIOD’
    57. ADJUSTING EVENT
    58. NON-ADJUSTING EVENT
    59. IAS 11 ‘CONSTRUCTION CONTRACTS’
    60. REVENUE
    61. CONTRACT COST
    62. PROFIT-MAKING CONTRACTS
    63. LOSS-MAKING CONTRACTS
    64. UNCERTAIN CONTRACTS
    65. PERCENTAGE OF COMPLETION METHOD
    66. DOUBLE ENTRY
    67. RECTIFICATION COSTS
    68. IAS 12 ‘INCOME TAXES’
    69. CURRENT TAX
    70. DEFERRED TAX
    71. DEFERRED TAX ASSETS
    72. DEFERRED TAX LIABILITIES
    73. DISCOUNTING TO PRESENT DAY VALUES
    74. DEFERRED TAX IN UK GAAP
    75. DEFERRED TAX ASSETS
    76. DEFERRED TAX LIABILITIES
    77. UK INDUSTRIAL BUILDINGS ALLOWANCE
    78. GOVERNMENT GRANTS IN THE UK
    79. DISCOUNTING DEFERRED TAX
    80. CURRENT DEVELOPMENTS
    81. IAS 16 ‘PROPERTY, PLANT AND EQUIPMENT’
    82. INITIAL MEASUREMENT
    83. SUBSEQUENT MEASUREMENT
    84. DEPRECIATION
    85. IMPAIRMENT
    86. SUBSEQUENT EXPENDITURE
    87. IAS 17 ‘LEASES’
    88. OPERATING LEASES
    89. FINANCE LEASES
    90. LESSOR ACCOUNTING
    91. EXISTING REQUIREMENTS
    92. PROPOSED REQUIREMENTS
    93. MEASUREMENT OF ASSETS AND LIABILITIES
    94. IMPLEMENTATION
    95. IAS 18 ‘REVENUE’
    96. IAS 19 ‘EMPLOYEE BENEFITS’
    97. SHORT-TERM EMPLOYEE BENEFITS
    98. POST-EMPLOYMENT BENEFITS
    99. OTHER LONG-TERM EMPLOYEE BENEFITS
    100. TERMINATION BENEFITS
    101. IAS 20 ‘ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE’
    102. GOVERNMENT GRANTS
    103. GOVERNMENT ASSISTANCE
    104. GOVERNMENT GRANTS: RECOGNITION
    105. IAS 21 ‘THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES’
    106. FOREIGN CURRENCY TRANSACTIONS
    107. IAS 23 ‘BORROWING COSTS’
    108. CAPITALISATION RATE
    109. IAS 24 ‘RELATED PARTY DISCLOSURES’
    110. RELATED PARTIES
    111. WHO IS A RELATED PARTY?
    112. ONE DIRECTOR IN COMMON
    113. PERSONS ACTING ‘IN CONCERT’
    114. IAS 26 ‘ACCOUNTING AND REPORTING BY RETIREMENT BENEFIT PLANS’
    115. IAS 27 ‘CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS’
    116. CONSOLIDATED FINANCIAL STATEMENTS
    117. CONSOLIDATION PROCEDURE
    118. SEPARATE FINANCIAL STATEMENTS
    119. IAS 28 ‘INVESTMENTS IN ASSOCIATES’
    120. EQUITY METHOD
    121. IAS 29 ‘FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES’
    122. IAS 31 ‘INTERESTS IN JOINT VENTURES’
    123. JOINT VENTURE
    124. IAS 32 ‘FINANCIAL INSTRUMENTS: PRESENTATION’
    125. FINANCIAL INSTRUMENT
    126. IAS 33 ‘EARNINGS PER SHARE’
    127. BASIC EARNINGS PER SHARE
    128. PREFERENCE DIVIDENDS
    129. PARTICIPATING PREFERENCE SHARES
    130. WEIGHTED AVERAGE NUMBER OF SHARES
    131. MULTIPLE CHANGES IN CAPITAL DURING A REPORTING PERIOD
    132. DILUTED EARNINGS PER SHARE
    133. DISCLOSURE
    134. IAS 34 ‘INTERIM FINANCIAL REPORTING’
    135. INTERIM FINANCIAL REPORTS
    136. MINIMUM CONTENT REQUIREMENTS
    137. IAS 36 ‘IMPAIRMENT OF ASSETS’
    138. IMPAIRMENT
    139. INDICATORS OF IMPAIRMENT
    140. INTANGIBLE ASSETS
    141. RECOGNITION OF AN IMPAIRMENT LOSS
    142. IAS 37 ‘PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS’
    143. PROVISION
    144. CONTINGENT LIABILITIES
    145. CONTINGENT ASSETS
    146. IAS 38 ‘INTANGIBLE ASSETS’
    147. RECOGNITION OF AN INTANGIBLE ASSET
    148. INTERNALLY GENERATED INTANGIBLE ASSETS
    149. RESEARCH EXPENDITURE
    150. DEVELOPMENT EXPENDITURE
    151. SUBSEQUENT MEASUREMENT
    152. INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
    153. INTANGIBLE ASSETS WITH FINITE USEFUL LIVES
    154. IAS 39 ‘FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT’
    155. FINANCIAL ASSETS
    156. FINANCIAL LIABILITIES
    157. EFFECTIVE INTEREST METHOD
    158. INITIAL MEASUREMENT
    159. DERIVATIVES
    160. EMBEDDED DERIVATIVES
    161. DERECOGNITION OF A FINANCIAL INSTRUMENT
    162. SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
    163. HEDGE ACCOUNTING
    164. CATEGORIES
    165. IAS 40 ‘INVESTMENT PROPERTY’
    166. INVESTMENT PROPERTY
    167. RECOGNITION
    168. SUBSEQUENT MEASUREMENT
    169. IAS 41 ‘AGRICULTURE’
    170. AGRICULTURAL ACTIVITY
    171. BIOLOGICAL ASSET
    172. AGRICULTURAL PRODUCE
    173. INITIAL MEASUREMENT
    174. FAIR VALUE
    175. GOVERNMENT GRANTS
  50. Appendix 2: Illustrative Audit Tests
    1. SHARE CAPITAL AND RESERVES
    2. TRANSACTIONS WITH DIRECTORS AND RELATED PARTIES
    3. INTANGIBLE NON-CURRENT ASSETS
    4. TANGIBLE NON-CURRENT ASSETS
    5. INVESTMENTS
    6. INVENTORY
    7. ATTENDANCE AT INVENTORY COUNT
    8. TRADE AND OTHER RECEIVABLES
    9. CASH AT BANK AND IN HAND
    10. PAYABLES
    11. HIRE PURCHASE AND LEASING
    12. PROVISIONS AND CONTINGENCIES
    13. EMPLOYEE WAGES AND SALARIES
    14. TAXATION
  51. Appendix 3: Illustrative Financial Statements
    1. LUCAS INC
    2. PARBRALLI ENGINEERING LIMITED
  52. Appendix 4: Illustrative Auditor Report (UK and Ireland)
    1. ILLUSTRATION 1 — UNQUALIFIED OPINION
  53. Index