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Q-Describe the substantive procedures to get evidence
In the past kyanite has recieved negative pressreport over the condition of its fastfood restaurants, with comments suggesting they are old fashioned and tired lookinh. Therefore during the year the company undertook a full review of all its assets and carried out extensive refurbishment to majority of its restaurants. This review resulted in significang amount of ageing in fixtures and fittinhs being disposed off. And a significant amount of capital expenditure was invested in all remaining restaurants.
Well my question is that the procedures that are provided by the examiner are all focused on additions and in the entire scenario i donot see any additions except a disposal.
Could you please clear this doubt.
It is helpful if you always specify which exam the question is from.
The scenario mentions both additions and disposals: “This review resulted in a significant amount of ageing fixtures and fittings being disposed of and a significant amount of
capital expenditure was invested in all remaining restaurants”. [Capital expenditure = additions].
The answer covers both additions and disposals also.
if the question asks to give “audit procedures” should we give Substantive procedures or Test of control?
They would be looking for substantive procedures. You can really only describe tests of control if the controls have been described in the question.