Audit Procedures

for Intangible Assets

 Assertions addressed:
1 Existence or Occurence
Obtain an analysis of ledger accounts for
intangibles.

2
 Obtain an analysis of ledger
1 accounts for intangibles.
• Test of beginning balances (tied up with
audited FS last year)

• GL vs SL (tied up)

3
 Assertions addressed:
2 Existence or Occurence
Examine documentation supporting
intangibles.

4
 Assertions addressed:
3 Completeness
Vouch additions to or acquisitions during
the year.

5
 Assertions addressed:
4 Completeness
Evaluate dispositions. and write offs during
the year.

6
 Evaluate dispositions. and
4 write offs during the year.
• Write offs – minutes of the meeting
• AE = Carrying amount / Useful life
• Change in estimated useful life - changes
in accounting estimate

7
 Assertions addressed:
5 Rights and Obligations
Perform analytical procedures.

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ACCOUNTING FOR RESEARCH
AND DEVELOPMENT COSTS
Full PFRSs
Under PAS 38 Intangible
Assets, research and
development costs are
generally expensed. However,
development costs may be
capitalized as intangible asset if
certain conditions are met.
PFRS for SMEs
Under the PFRS for SMEs research
and development costs are
recognized as expenses in the
period incurred unless they form
part of the cost of another asset.
The PFRS for SMEs does not
provide conditions for the
capitalization of development
costs.
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 Assertions addressed:
6 Valuation or allocation
Evaluate amortization policy and verify
computation of amortization

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AMORTIZATION OF
INTANGIBLE ASSETS
Full PFRS
Under PAS 38, only intangible assets
with finite useful life are amortized.
Intangible assets with indefinite useful
life are not amortized but tested for
impairment at least annually.
PFRS for SMEs
Under the PFRS for SMEs, all
intangible assets shall be considered to
have a finite useful life. The useful life
of an intangible asset shall not exceed
its legal life, if any. If the useful life of
an intangible asset cannot be
established reliably, the life shall be
determined based on management's
best estimate but shall not exceed ten
years.
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 Assertions addressed:
7 Presentation and Disclosure
Evaluate financial statement presentation
and disclosure for intangibles.

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Thanks!
Any questions ?
You can find me at
◉ @ruhenaaaaaa
◉ rujeansalaraltejar@gmail.com

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