(b)  Depreciation
   Matters:
   –  Materiality
  –  Annual review of estimated useful life is required 
  –  Amendment has a significant impact on profit and could be an attempt to inflate profit
  –  Professional scepticism should be applied 
  –  Incorrectly accounted for as a prior year adjustment, should be a prospective adjustment
  –  Retained earnings and PPE are overstated

Evidence:
  –  Notes of a meeting with management on incorrect accounting treatment 
  –  Confirmation from management that a correction will be made to account for it prospectively rather than retrospectively
  –  Agreement of the carrying value of the plant and equipment to the non-current asset register
  –  Documentation supporting the extension of the useful lives of the assets
  –  A written representation from management explaining the justification for the amendment to the estimated life of the assets
  –  A copy of management’s calculation of the amended depreciation charge, checked for arithmetical accuracy, and each element of the calculation agreed to supporting documentation

Maximum marks  8