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sources of document

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › sources of document

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Kim Smith.
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  • July 17, 2021 at 2:11 am #627987
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    1-Select a sample from the list of additions and review the description on the invoice to confirm that they relate to capital expenditure items rather than repairs and maintenance: verifies existence.

    2- Inspect a breakdown of repairs and maintenance expenditure for the year to identify items of a capital nature: verifies completeness.

    maam can you pls tell me the sources of document for the above? as in where can an auditor find the list of additions? and from which document can breakdown of repairs and maintenance expenditure be obtained?

    July 17, 2021 at 8:51 am #628016
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6803
    • ☆☆☆☆☆

    1. “additions” will be part of the disclosure in the financial statements (the note reconciling opening carrying amount of non-current assets to closing carrying amount). So management needs this information and can therefore provide it to the auditor. The client might list all the additions from debit postings to asset accounts in the general ledger or extract a list of additions from the non-current asset register (of course they should be the same!)

    2. Again, the client should have controls in place to ensure that expenditure that should be capitalised is not expensed – so periodically a list may be extracted from the debit postings to repair and renewal/maintenance expense a/cs. If a list is not prepared routinely, the auditor will ask for one – for audit purposes – or might prepare their own list (if only a few postings and that would not be a waste of the auditor’s very expensive time).

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