Question 5b
Marking Guide
up to 1 mark per valid point, overall maximum of 6 marks per event | |
| event 1 – defective chemicals | |
| – provides evidence of conditions at the year end | |
| – inventory to be adjusted to lower of cost and net realisable value | |
| – calculation of materiality | |
| – review board minutes/quality control reports | |
| – discuss with the directors, adequate inventory to continue to trade | |
| – obtain written representation re going concern | |
| – obtain schedule of defective inventory, agree to supporting documentation | |
| – discuss with directors basis of the scrap value | 6 |
| event 2 – explosion | |
| – provides evidence of conditions that arose subsequent to the year end | |
| – non-adjusting event, requires disclosure if material | |
| – calculation of materiality | |
| – obtain schedule of damaged property, plant and equipment and agree values to asset register | |
| – obtain latest inventory records to confirm damaged inventory levels | |
| – discuss with the directors if they will make disclosures | |
| – discuss with directors why no insurance claim will be made | 6 |
| max marks | 12 |