question 11 Grape from bpp kit

Copy of the invoice

Copy of the contract ($500,000! There certainly should be a contract!)

Minutes of the meeting with the finance director whereat someone from the audit team should have discussed the (non-)acceptability of the capitalisation treatment

The question is for 12 marks

There are two parts to the question, so 6 marks each

The question asks you to “Comment on the matters to be considered and explain the audit evidence you should expect to find …”

So two parts to each part – “comment on” and “explain”

So three marks for comments, three for explanation, three for comments, three for explanation

There’s your mark allocation

Now, your two pieces of evidence (and my further three pieces) satisfy neither the requirement of ‘comment on’ nor the requirement of ‘explain’

They are merely the thread from which a comment and / or an explanation can be drawn

Surely the ‘comment on’ requirement is asking for:

definition of an asset
employees not controlled by the entity, therefore cannot be classed as an asset
is $500,000 material and, if it is …
… we are looking at a potential qualified audit opinion if the client refuses to expense the costs

Then the ‘explain’ element will take all of our combined points …

(for example ‘copy of the bank statement (would you really have a copy of the cash book on file?) to confirm the amount of money paid to the training entity) where ‘… to confirm the amount …’ is the explanation of the reason for that evidence on the file

… and fill them out with the reason why that evidence is / should be on file

OK?