Audit Scope Accounts Involved Audit Procedure

Peruse land deeds and attach

copies in the file
Land
Carefully check the values as per
land deed together with ledger

Check and document the purchase

value of the building with suppliers
invoices and bank statement
Building
Go through depreciation policy of
the company and ensure that they
calculate in accordance with it

Review the process for purchasing

and receiving capital assets.
Furniture and Fixtures
Make sure the useful life estimate is
reasonable.
PROPERTY, PLANT,
AND EQUIPMENT Trace the accumulated depreciation
amount in the assets register to the
general ledger.

Obtain assets sub ledger which

Manufacturing Equipment includes acquisition
date,cost/valuation,
additions/disposals, depreciation
charges, net book value and other
relevant information. Reconcile the
aggregate amount to the general
ledger.

Inspect if the asset are in existence

as of the balance sheet date

Motor Vehicles
 Motor Vehicles
Ensure that the right of ownership
of the asset vested in or belonged
to the undertaking

Examine the documents supporting

the purchase and trace the
payment to cash book if the
Franchise business is bought during the year.

Ensure the capitalization method

meets the criteria
Inspect the registration document
or certificate issued by the
authority concerned.
Copyright
Check to the supporting documents
to confirm the accuracy and
consistency of classification

Scan through the list of expense

accounts to establish that no patent
expenses have been wrongly
treated as revenue expenses.

Patent
INTANGIBLES
Check calculation and
reasonableness of amortization
according to the life of the patent,
paying attention to the unexpired
term in light of current conditions.

Check adequate disclosure of the

accounting policy.
Trademark Inspect the registration document
or certificate issued by the
authority concerned.

Review and discuss with

management whether there is any
sign of impairment loss on the
carrying amount at year-end.
Goodwill
Ensure that the accounting policy
related to goodwill is properly
disclosed and complies with
accounting standard.
 Check if there are set off: between
receivable ledger and payable
ledger.
Accounts Payable
Vouch a sample of recorded
creditors transactions to supporting
documents: to agree the amount.

Select a sample of goods received

note just before and after the year
end, trace to invoices and
Trade Payables purchases ledger.

Review payments to suppliers just

after year end.

Obtaining a schedule of accruals:

CURRENT ensuring that it is cast correctly, and
LIABILITIES comparing it with prior year
Accrued Expenses accruals and performing other
analytical procedures.

Agree accruals to payments after

year end.

Obtain list of matters referred to

Litigation and Claims lawyers and consider any liabilities.

Examine board minutes.

Recompute the clients calculation

of income tax currently payable
Income Taxes Payable
Obtain or prepare a schedule
calculating the tax provision for the
year
 ACCTG 013
Midterm
Terminal Research Project
Audit Procedures and Evidences

Classification of Source Documents

Source Document/s
Internal or External Turnaround, Product or Source

Land deed External Source

Land deed and General Ledger Internal and External Source and Product

Invoice and Bank Statement External Turnaround

Depreciation Policy Internal Source

Company Policy Internal Source

Notes to Financial Statements Internal Source

Subsidiary Ledger and General Internal Product

Ledger

Subsidiary Ledger and General Internal Product

Ledger

Financial Statements Internal Product

 Register of Title External Source

Purchase Invoice Cash Internal and External Turnaround and Product

Disbursement Journal

Company Policy and Notes to Internal Source and Product

Financial Statements

Copyright ownership and License External Source

Agreement

Company Policy and Notes to Internal Source and Product

Financial Statements

Income Statement Internal Product

Notes to Financial Statements Internal Product

Notes to Financial Statements Internal Product

License Agreement External Source

Minutes of the meeting Internal Source

Notes to Financial Statements Internal Product

 Receivable Ledger and Payable Internal Product
Ledger

Purchase Invoice and Cash Internal and External Turnaround and Product
Disbursement Journal

Purchase Invoice and Purchases Internal and External Turnaround and Product
Ledger

Cash Disbursements Journal Internal Product

Schedule of Accruals Internal Source

Schedule of Accruals and Balance Internal Source and Product

Sheet

Lawsuits External Source

Minutes of the meeting Internal Source

Balance Sheet Internal Product

Schedule of tax Internal Source

 Audit Scope Accounts Involved Audit Procedure

The auditor should examine the title

deeds in order to ensure that they are in
the name of the client.

In case the property is mortgaged, he

Land should obtain a certificate from the
mortgagee or his solicitor to the effect
that the title deeds are in their
possession. He should also enquire
whether there is any second or
subsequent mortgage or not.

If the client has constructed the building,

the auditor should examine the
certificates received from the builder,
contractor, architect and other necessary
papers and documents.

Building
If the building is a newly purchased one,
PROPERTY, PLANT, the value of building can be ascertained
AND EQUIPMENT by vouching the amount paid to the
contractor. If it is partly constructed, by
obtaining architects certificate, its value
can be determined.

Check if the assets have been correctly

valued having regard to their physical
Store and Office Equipment condition
Review if the values are correctly
disclosed in the balance sheet
Check if the assets are depreciated
correctly
Manufacturing Equipment Ensure that the right of ownership of
the asset vested in or belonged to the
undertaking
Recompute depreciation calculations to
ensure accuracy.
Delivery Equipment
Inspect if the asset are in existence as of
the balance sheet date
 Trace from the list of register of patents
and trademarks to the ledger account to
ensure that the items have been
recorded with supporting documents for
their acquisitions.
Patent

Check payments to cash book and

examine the correspondence with patent
agent and Patent Office for the creation
and registration.

Review amortization imposed if

necessary
Customer List
Consider adequate disclosure in the
financial statements
Inspect the registration document or
certificate issued by the authority
INTANGIBLES Trademark concerned.
Check adequate disclosure of the
accounting policy.
Inspect the registration document or
certificate issued by the authority
Copyright concerned.
Ensure the capitalization method meets
the criteria

Examine the documents supporting the

purchase of the business and trace the
payment to cash book if the business is
bought during the year.
Goodwill

Review and discuss with management

whether there is any sign of impairment
loss on the carrying amount at year-end.

Examine correspondence with lawyers.

Litigation and Claims
Review the clients system of recording
claims.

Post balance sheet payments and

invoices accounted: review after date
invoices and payments and ensure they
have been provided for at the year end as
appropriate.
Accounts Payable

CURRENT
 Accounts Payable
Check balances extracted from purchase
ledger balances to list of creditors: check
a sample of balances from the schedule
to the purchase ledger.

Compare amounts accrued as of the

balance-sheet date to subsequent
CURRENT payments made.
LIABILITIES
Accrued Payroll
Trace amounts accrued in payroll records
as of the balance-sheet date to amounts
recorded in the general ledger.

Vouch a sample of recorded creditors

transactions to supporting documents: to
Trade Payables agree the amount.
Check whether last year closing balance
has been brought forward

Obtain an understanding of the nature of

the account and the clients policy and
method of accounting.
Unearned Revenues

Determine if the deferred credit balance

at the balance-sheet date is reasonable.
 ACCTG 013
Midterm
Terminal Research Project
Audit Procedures and Evidences

Classification of Source Documents

Source Document/s
Internal or External Turnaround, Product or Source

Land deed External Source

Certificate of Mortgage External Source

Invoices and Certificates External Turnaround and Source

Architect's Certificate and Purchase External Turnaround and Source

Agreement

Purchase Agreement and Invoice Internal and External Turnaround and Source

Notes to Financial Statements Internal Product

Balance Sheet and Notes to Internal Product

Financial Statements

Register of Title External Source

Notes to Financial Statements Internal Product

Balance Sheet Internal Product

General Ledger and list of Patents Internal Product and Source
Registered

Cash Disbursements and Registry Internal and External Product and Source
Certificate

Notes to Financial Statements Internal Product

Notes to Financial Statements Internal Product

Registry Certificate External Source

Company Policy Internal Source

Copyright ownership and License External Source

Agreement

Notes to Financial Statements and Internal Product and Source

Company Policy

Cash Disbursements and Purchase Internal and External Product and Source
Agreement

Minutes of the Meeting Internal Source

Minutes of the Meeting Internal Source

Company Policy Internal Source

Cash Disbursements and Balance Internal Product

Sheet
Cash Disbursements and Balance Internal Product
Sheet

Cash Disbursements and Balance Internal Product

Sheet

Payroll Checks Record and Balance Internal Product

Sheet

Invoice and Check Disbursement Internal and External Turnaround and Product

Balance Sheet Internal Product

Company Policy Internal Source

Balance Sheet Internal Product