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Non-current Assets

PPE
Impact on FS: Revenue/Capital expenditure; Misstatement in PPE balances &
repair costs (IAS 16)
Response: Obtain analysis of costs & trace description of the invoices to
determine the nature of expenses; establish which cost is to be rev/cap then
compare with GL and FS to ensure they are being classified as NCA or repair
costs.
Impact on FS: whether the revaluation is accordance with IAS 16 and
appropriate disclosure been made in FS.
Response: whether whole class of asset being revalued and the valuation is
undertaken by an expert
Impact on FS: Redundant assets; misstatement in PPE
Response: Discuss with management any other use of this assets, write off.
Impact of FS: Incorrect exchange rate used in the translation of currency;
misstatement in PPE.
Response: Check purchase invoice and purchase contract whether theres
specified rate else, check back the rate on the date that the purchase
undergoes.

Intangible asset
Impact on FS: generate future economic profit? criteria (IAS 38); Assets & profit
overstated.
Response: obtain analysis of development cost & determine technical and
commercial feasibility, ensure those DC doesnt meet criteria expensed off to
ensure they are being classified as Intangible assets or expenses.

Current Assets
Inventory
Impact on FS: value using old price/standard costing/estimated amount by
director/expire food; over or understatement of inventory amount
Response: Compare old/std cost to invoice price, any significant difference,
discuss with management whether need to adjust to ensure valuation is
appropriate. Compare invoice price and NRV to see if lower of two to show
director estimate reasonable, else adjust accordingly.
Trade Receivables
Impact on FS: not recoverable; no allowance of dd; overstatement in TR
Response: obtain aged receivables listing and check extended post year end
payment. If not payment received, discuss with management any allowance of
doubtful debt to adjust to ensure valuation is appropriate.
Equity
Share capital, share premium
Impact on FS: accounting treatment & disclosure complex in nature; allocation
between share capital and share premium might wrong.

Response: Auditor must ensure the classification between SC & SP is correct


and the proceed had been received. Disclosure should be review to ensure
compliance with relevant IFRS.
Non-Current Liabilities

Loan
Impact on FS: accounting treatment & disclosure complex in nature; allocation
between non-current & current liabilities might be wrong.
Response: Auditor must ensure the classification between NCL & CL is correct
and the proceed had been received. Disclosure should be review to ensure
compliance with relevant IFRS.
Impact on FS: loan covenant; result payable immediately; current liability;
going concern
Response: obtain loan agreement to identify any breaches. Determine the
potential impact on the company if the bank would to demand repayment.
Maintain professional skepticism on area which may be manipulated to avoid the
breach of covenant.
Impact on FS: interest expense of the loan might be excluded, resulted in
understatement of finance cost & overstatement of profit.
Response: perform analytical procedure by comparing the prior year and
current year interest expense to determine whether is it reasonable. Perform
recalculation based on the loan agreement to ensure the accuracy of the
interest expense.

Current liabilities

Trade payables
Impact on FS: misstatement in cut off of inventory, purchases and payable
Response: select few GRN before and after year end, trace to invoice to ensure
good received during the year (GRN dated before y/e) had been properly
invoiced to ensure all liabilities had been taken up (completeness) For, those
good received after year end (GRN dated after y/e), should be excluded from
inventory, purchases and payable.
Provision
Impact on FS: possible/probable; contingent liabilities/provision; misstatement
in completeness of provision
Response: Consult with lawyer the possibility of the case and estimation of
compensation require to record/disclose in financial statement.

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