How to audit trade payables

To audit trade payables, the auditor should perform the following steps: Understand the entity’s trade payables and the related business processes: The auditor should obtain an understanding of the entity’s trade payables, including the nature, timing, and amount of the payables, and the related business processes, such as the purchasing and payment processes. Assess the… Continue reading How to audit trade payables

How to audit trade receivables

To audit trade receivables, the auditor should perform the following steps: Understand the entity’s trade receivables and the related business processes: The auditor should obtain an understanding of the entity’s trade receivables, including the nature, timing, and amount of the receivables, and the related business processes, such as the sales and billing processes. Assess the… Continue reading How to audit trade receivables

Sampling in audits

In auditing, sampling is the process of selecting a subset of items or transactions from a population for the purpose of testing and evaluating the population. Sampling is used in auditing to provide the auditor with sufficient appropriate audit evidence to support the audit opinion, while avoiding the need to test and evaluate the entire… Continue reading Sampling in audits

Trivial errors

In auditing, the concept of trivial refers to an item or matter that is insignificant or immaterial, and therefore does not require further attention or audit procedures. An item or matter is considered trivial if it is small in relation to the overall size and nature of the financial statements, and if it does not… Continue reading Trivial errors

Materiality

Materiality and performance materiality are important concepts in auditing and financial reporting, as they help to determine the nature, timing, and extent of the audit procedures and the disclosures in the financial statements. Materiality refers to the significance of an item or matter to the financial statements. An item or matter is material if its… Continue reading Materiality

Audit assertions under the ISAs

Audit assertions are the statements made by the management of an entity about the financial statements, and are the basis for the auditor’s audit procedures and conclusions. The International Standards on Auditing (ISAs) specify certain audit assertions that the auditor should consider when planning and performing the audit, in order to obtain sufficient appropriate audit… Continue reading Audit assertions under the ISAs

Intangible assets (IAS 38)

International Accounting Standard (IAS) 38, “Intangible Assets,” provides guidance on the recognition, measurement, and disclosure of intangible assets. IAS 38 applies to all intangible assets, except for certain intangible assets that are specifically excluded from the scope of the standard, such as financial instruments, deferred tax assets, and assets arising from employee benefits. IAS 38… Continue reading Intangible assets (IAS 38)

Published
Categorized as IFRS

Goodwill

Goodwill is an intangible asset that arises when one entity acquires another entity and pays more than the fair value of the acquired entity’s net assets. Goodwill is typically assigned to a cash-generating unit (CGU), which is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows… Continue reading Goodwill

Restrospective correction of prior period errors

A retrospective correction of prior period errors is a correction of errors that occurred in a previous period, but were not discovered until a subsequent period. Retrospective correction of prior period errors is required by IAS 8 and also FRS 102 s10.21 which state that errors should be corrected retrospectively by adjusting the opening balance… Continue reading Restrospective correction of prior period errors