Assertion for Inventory:

1. Existence: During the inventory count Take the sample from the inventory account and agree it
to the physical inventory held at the warehouses.
2. Valuation: Take the sample of goods from the warehouse, and agree the cost as in the records
to the corresponding purchase invoices.
3. Completeness: For the sample of physical inventory held at warehouse trace it to the inventory
accounts to confirm its recorded.
4. Rights and Obligations: For the year end inventory confirm the title belongs to company by
agreeing the latest purchase invoices in the company name.

Part b:

Depreciation:

 Discuss with finance director the assumptions used to determine the useful life of 10 years for
leisure equipment, to confirm its reasonable.
 Compare the depreciation rates applied to the new leisure equipment to the industry averages
to ensure its appropriate and reasonable.
 Take the sample of new leisure equipment and Recalculate the depreciation charge to confirm
its arithmetical accuracy.
 Review the disclosure notes adequacy that the depreciation charge and useful life in accordance
with IAS 16.

Food Poisoning:

 Obtain the written representation from the management, if they think the claim is unlikely to be
successful and hence no provision required.
 Review the correspondence from the customers to assess the chances of damages had to be
paid for the claim.
 Send the enquiry letter to the company lawyer to confirm his thoughts on the probability of
success of the claim.
 Review the post year end bank statement and cash book to assess if any payments have been
made as a damages to the claimants.
 Review the disclosure notes to confirm their adequacy and they are in accordance with the IAS
37.