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Hi,
Going through the revision phase am facing difficulties at a) Identifying the FS risk and b) Proposing particular audit procedures, for the following IFRS / IAS:
1.IAS 12,
2.IFRS 2,
3.IFRS 3, and
4.IAS 19.I can appreciate that the mere reason for the above is due to the fact that even whilst practicing at a firm, its not usual to be exposed to scenario’s which may require application of the above standards in particular.
I do also understand that IAS 12 and IFRS 2 is covered at the question bluebell, however, that only covers certain elements of the standards such as recoverability or measurement. I would be extremely grateful to have some guidance on how to approach questions requiring application of the above standards, or perhaps if summary of audit procedures and common FS risk for the above could be provided.
Thanking you in ancipation.
Kind regards,
MOQFirst of all, the examiner HAS specifically said that knowledge of these are required in detail.(SA 2008)
However she tends to focus on the key principles from an audit perspective.Main audit issues to consider
IAS 12
identification of all temporary differences in period
correct calculation of the tax liability and expense
correct tax rate applied
recoverability of tax lossesIFRS 2
correct classification as cash based or equity based scheme
appropriateness of management’s assumptions of likelihood of options vesting
fair value used in compliance with IFRS 2
fair value of goods or service obtained is used where applicableIFRS 3
(Goodwill is the key topic here and therefore an acquisition is a common scenario)
confirmation of all consideration to a purchase contract
assessment of discount rate used for reasonableness where deferred consideration applies
assessment of likelihood of contingent consideration being paid
Verification of any valuation work on net assets acquired
carrying value of goodwill (no amortisation, impairment tested)IAS 19
analytical procedures on salary levels, asset growth in relation to stock market etc.
confirmation of pension assets from investment manager
recalculation of pension expense
confirmation of actuarial assumptions with other evidence
assessment of the competence of the actuaryThese are deliberately brief but cover the scope and complexity of the stuff that might be required.
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