APPENDIX 2
ILLUSTRATIVE AUDIT TESTS
This Appendix looks at some typical tests that can be undertaken on the key audit areas when using an audit approach which focuses primarily on the statement of financial position (balance sheet). This appendix will look at some typical tests to be performed on the following areas:
- Capital and reserves.
- Related parties.
- Intangible fixed assets.
- Tangible fixed assets.
- Investments.
- Inventories.
- Receivables.
- Bank and cash.
- Creditors.
- Leasing.
- Provisions and contingencies.
- Payroll.
- Value Added Tax (UK).
- Consolidated financial statements.
SHARE CAPITAL AND RESERVES
Objectives
- To confirm that share capital is correctly recorded within the financial statements.
- To confirm that reserves are correctly recorded within the financial statements.
- To confirm that the financial statements agree to any statutory records (such as records held with the Registrar of Companies in the UK).
Tests
- Agree details of the share capital to the statutory records and agree to the financial statements.
- Ensure any amendments to the share capital have been properly notified to any regu-latory authority (such as the Registrar of Companies in the UK).
- Obtain or prepare a reconciliation of the movement in all the types of equity in the statement of financial position (balance sheet). Agree that all transfers have been made correctly and agree all transfers to the financial statements.
- Ensure that any dividends paid or proposed are done so with regard to the sufficiency reserves ...
