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in exam Analysis review for provision 14 employee not practical but re-calcuation the provison is best method.
how in exam choose the acceptable substantive test?
which method use to increase this ability to choose suitable substantive Procedure?sorry,
in past exam analysis procedure for provision not practical and suitable answer is
re-calcuation as in exam report Dec-2011.
which method use to increase this ability to choose suitable substantive Procedure?Thank you on advance.
and the lesson of help as voluntary is greater than the value of any certificate.
because value of human is greater.Thank again.
I think you have to look at the figure and the assertion you are trying to obtain evidence for. The methods available for substantive tests are: analytical review, enquiry and confirmation, inspection, observation, and recalculation and reperformance.
If you are trying to assess the valuation of receivables then observation won’t be much use as there is nothing to see happening. Similarly, if you want to test the ownership of an asset, recalculation is unlikely to help.
If analytical procedures are to be used then you have to be able to compare the figure in the FS with previous year’s or the budget or, perhaps industry standards. Ot, perhaps to a proof in total.
The point the examiner was making was that the provision about the 14 employees is likely to have been a unique calculation with nothing the previous year and nothing in the budget and no other business with people having the same employment history. Therefore, analytical procedures are a dead end.
To assess the provision it must be recalculated and enquireys made about the basis and assumptions used. If the calculation is very complex then 3rd party experts might be needed to help with the work
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