procedure

Peach Co has been developing a new production process which will help to reduce sugar in its drinks by 50%. Development commenced on 1 november 20X4 and the total amount capitalised was 0.8m. On 1 may 20X5, the food safety authority approved the process and production of the new reduced-sugar soft drinks commenced.

Describe substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to Peach Co’s development expenditure. (6 marks).

The following is what I have written:

Obtain a breakdown of 0.8m cost capitalised and agree all costs capitalised to supporting documentation such as invocies to ensure they are capitalised in accordance with Ias 38.

Discuss with management the accounting policy applied, particulary in respect of identifying the research and development stages to ensure correct classification.

Recalculate the amorisation charge to ensure accuracy such as four months of amortisation charge has been accounted for

Obtain a breakdown of 0.8m cost capitalised and cast it to ensure its arithmatical accuracy

Review the disclosure relating to this 0.8m cost capitalised in detail to ensure it is complete and accurate.

Review the adequacy of this disclosure relating to this 0.8m cost capitalised to ensure it complies with the accounting standard and local legislation.

Ask supporting documentation from the management to confirm the approval from food safety authority

Is this answer correct and enough for full marks.

How many marks does this answer seem to be of

What are the weaknesses in this answer.

How could I improve it