- February 22, 2022 at 9:10 pm #649144McginzMember
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I’m going through the BPP revision kit and there is a question asking to describe the substantive procedures you should perform to confirm the redundancy provision at year end.
For my answer I have put to “discuss with managment and the legal team if there are any additional legal fees for breaching contractual terms of the employees contract as part of the redundancy”
This is not in the answer provided by BPP and i just wondered if this would get marks, or should i stick to reviewing board minutes for probability and seeking written confirmation from management for the completeness of the provisionFebruary 23, 2022 at 9:21 am #649175Kim SmithKeymaster
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If a question if flagged as a past exam question (as most Qs in approved kits are), the answers are likely to be comprehensive. Although it is true that “other valid points” would be awarded credit, you are right to be sceptical whether your ideas for other points are valid.
I don’t generally respond on students’ answer points (because some students write lots of them and I cannot provide a marking service – this is just a caveat for other reading this post) but I can reply to you on this one because I can offer you some general advice.
First I would say that “discuss” is really not very good as a substantive procedure – it is more appropriate as an “auditor’s response” in a risk question, where the additional information that might be obtained from the discussion will help progress the audit.
Also, audit evidence has to be documented – even if “blah blah” (please don’t quote me!) is written into the audit working papers – it’s not “good” evidence – the auditor cannot rely on it this alone. Whatever you might follow up the discussion with should be better evidence.
Although it would be relevant to consider whether legal fees associated with the redundancy have been properly accounted for (and you’re right to be looking for completeness), the evidence could come from direct communication/letter of inquiry but would most likely be seen in after-date invoices. Far better than “chatting” with anyone about it.
Lastly, “breaching contractual terms” is pure speculation. The exercise of professional scepticism does not extend to a presumption that management/directors are lacking integrity. The brief scenario gives a business reason for the redundancy – there is nothing to suggest that management would not observe the “proper form” in making employees redundant.
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