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Entity: Ref:

Period end: App5

APPENDIX 5 SHARE-BASED PAYMENTS

* Please tick where applicable

No. Description Yes No N/A

1 Lead schedule

2 Audit programme – Share-based Payments

3 Details of plan

4 Fair value estimation

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Entity: Ref:
Period end: App5.2

AUDIT PROGRAMME – SHARE-BASED PAYMENTS


SUMMARY SHEET

I. AUDIT OBJECTIVES

Assertions

1. To establish share-based payment transactions are correctly recorded and accounted for in the
E, R&O, C, V
balance sheet and profit or loss.

2. To establish all necessary disclosures concerning share-based payment transactions are accurately
made and that the information is appropriately presented and described in the financial statements. P&D

II. RISK CONSIDERATIONS

Yes No Comments

1. Were there any corrected or uncorrected misstatements in prior


period? (B7)

2. Were there any disclosure deficiencies in prior period?

3. Was the assessed risk during the prior period for the account classified
as Medium or High?

4. Are there any changes in accounting policies during the period?

5. Is the account balance significant (amount > OM) or expected to be


significant at the end of the reporting period?

6. Is fair value assessment of the share-based payment transactions


performed by the management?

7. Where the work of an expert is to be relied on for the following:


 valuation of assets and liabilities;
 determination of quantities;
 application of specialised techniques to determine amounts;
or
 measurement of work completed,
the auditor is to complete one or both of the following supplementary
programmes:
(i) Using the Work of Management's Expert (App8)
(ii) Using the Work of an Auditor's Expert (App9)

8. Can extensive analytical procedures be used to improve the efficiency


and effectiveness of the audit?

9. Are there any non-compliances with FRSs in prior periods?

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Period end: App5.2

Document nature of the account balances using above risk considerations. Determine if these considerations represent
specific risks. (Transfer risk to C8)

III. ASSERTION LEVEL RISK AND SECTION PERFORMANCE MATERIALITY

Financial statements level risk per C8 L / M / H

Assertions E R&O C V P&D

Assertion level risk assessed per C8 (L/M/H)

Inherent Risk (IR) Factor (refer to table


below)

Performance materiality
[Materiality/IR Factor]

Inherent Risk (IR) Factor Table

Assertion level risk


Inherent Risk (IR) Factor
L M H
L 1.2 1.4 1.6
Financial Statement level risk M 1.4 1.8 2.1
H 1.6 2.1 2.5

IV. AUDIT PROCEDURE DESIGN CONSIDERATIONS

Yes No Comments

For risks identified in C8, perform the audit procedures per C9.

1. Step B

 Is the account balance significant (amount > PM) or expected to be significant at the end of the reporting period?
 Is fair value assessment of the share-based payment transactions performed by the management?

2. Step C

 Are there any non-compliances with FRSs in prior periods?


 Are there any changes in accounting policies during the period?
 Is fair value assessment of the share-based payment transactions performed by the management?

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Entity: Ref:
Period end: App5.2

V. PLANNING CONCLUSION
I am satisfied from the planned tests, sufficient appropriate evidence can be obtained to meet the audit objectives.

Prepared by: Reviewed by:

Date: Date:

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Entity: Ref:
Period end: App5.2

AUDIT PROGRAMME – SHARE-BASED PAYMENTS

Results
Initials and
WP ref satisfactory
date
Y/N

A. General

Obtain movement schedule and reconcile to general ledger

Establish that the share-based payments recorded agrees to


general ledger and supporting details. The procedures include
but not limited to:

1 Obtain and check, or prepare, a lead schedule for the current


period's figures and reconcile this to the trial balance in B5.

2 Obtain the movement schedule of the share-based payments


including all relevant schedule. Agree the sub-total to lead
schedule.

3 Perform procedures to test the accuracy and completeness of


the information in all listing and schedules provided by
management for audit purpose.

Perform analytical procedures

Establish that defined benefit assets and liabilities are not


materially misstated.

4 Carry out analytical procedures such as:


(a) comparison of the current figures with those of prior periods;
and
(b) review of key ratios or other performance indicators.

5 Review for items above performance materiality or that are


otherwise unusual and verify.

B. Share-based payment

Establish that the share-based payments expenses are correctly


determined and accounted for. Consider the perform the following
procedures:

1 In respect of the share-based payments arrangement entered into


the period, obtain the details of the arrangements including but
not limited to agreements between the entity and its employees
(or suppliers), board of directors’ or shareholders’ minutes of
meeting, share-based payment scheme detail plan, etc.

2 Check and document that the accounting treatment of any share-


based payment transactions is in accordance with applicable
accounting standards. In particular for equity-settled share-based
payment transactions, has the entity measured the goods or
services received, and the corresponding increase in equity at:
(a) the fair value of the goods or services received; or
(b) if the entity cannot estimate reliably the fair value of the
goods or services
(c) received then, indirectly, by reference to the fair value of the
equity instruments granted?

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Entity: Ref:
Period end: App5.2

Results
Initials and
WP ref satisfactory
date
Y/N

3 Inquiry on management’s method of determining the fair value of


the share-based payments. Critically evaluate the reasonableness
of the assumptions used by the management and obtain relevant
supporting documents to support the valuation of equity settled
financial instruments.

4 When the valuation is performed by a valuation expert, complete


the supplementary audit programme “Using the Work of
Management’s Expert” (App8) in respect of the valuation.

5 For cash-settled share-based payment transactions, has the entity


measured the goods or services acquired and the liability incurred
at the fair value of the liability?

6 For share-based payment transactions in which the terms of the


arrangement provide either the entity or the counterparty with the
choice of whether the entity settles the transaction in cash (or
other assets) or by issuing equity instruments: has the entity
accounted for that transaction, or the components of that
transaction, as either:
(a) a cash-settled share-based payment transaction if, and to
the extent that, the entity has incurred a liability to settle in
cash or other assets; or
(b) as an equity-settled share-based payment transaction if, and
to the extent that, no such liability has been incurred?

C. Presentation and disclosure

Establish that the disclosure of the items is in accordance with the


applicable financial reporting standards.

1 Consider the need to complete the financial statements disclosure


checklist relating to this account to ensure appropriate presentation
and disclosure.

2 Consider the common key disclosure requirements/weakness


relating to this account and ensure that these have been properly
addressed.

VI. CONCLUSION

Yes No NA Comments

1. There are no exceptions in our response to the risks identified


in C9.

2. The work has been performed as planned and the findings and
results have been adequately documented.

3. There are no additional comments to be included in the letter of If no, amend A3 or A8


representation (A3) or letter of comment (A8). Where accordingly.
applicable, the planned extent of reliance on internal controls in
this area remains appropriate.

4. All necessary information has been obtained for the


presentation and disclosure in the financial statements.

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Entity: Ref:
Period end: App5.2

Yes No NA Comments

5. Misstatements identified (other than those deemed to be clearly


trivial) have been recorded in A5.

6. Initial materiality and/or risk assessment need not be revised in If no, include in A4 and
view of the audit evidence obtained. consider the impact on
the remainder of the
audit work and on any
work undertaken to
date.

7. Sufficient appropriate evidence has been obtained to support If no, include in A4 and
the audit objectives. consider the effect on
audit opinion in A6.

Prepared by: Reviewed by:

Date: Date:

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Entity: Ref:
Period end: App5.2

AUDIT PROGRAMME – SHARE-BASED PAYMENT

Results
Initials and
WP ref satisfactory
date
Y/N

C. Presentation and disclosure – Key disclosure requirements /


common disclosure weakness

1 An entity shall disclose the following information:


(a) Description of each type of share-based payments
(b) Number and weighted average exercise prices for each
category such as beginning for the period, granted, forfeited,
exercise, expired, outstanding and exercisable at the end of
the period.
(c) Weighted average exercise prices of options exercised and
outstanding at end of the period.
(d) the range of exercise prices and weighted average remaining
contractual life of the outstanding options at end of the period.
(e) The fair value of the share options under different categories.
(f) Expenses recognised during the period.

2 Where the accounting for share-based payment transactions


includes the directors' estimates of the number of equity
instruments expected to vest, or other issues, check that these
opinions are confirmed in the letter of representation.

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