Question 1b
Marking Guide
audit procedures | |
| generally 1 mark for each well described audit procedure: | |
| – confirm the value of assets and liabilities which have been derecognised from the group | |
| – confirm goodwill that exists is derecognised from the group | |
| – confirm that the stow group is no longer listed as a shareholder of the company | |
| – obtain legal documentation in relation to the disposal to confirm the date of the disposal and confirm that broadway co’s profit has been consolidated up to this date only | |
| – agree or reconcile the profit recognised in the group financial statements to broadway co’s individual accounts as at 1 september 2013 | |
| – analytical procedures to gain assurance that the amount of profit consolidated from 1 january to 1 september 2013 appears reasonable | |
| – reperform management’s calculation of profit on disposal in the group financial statements | |
| – agree proceeds received to legal documentation/cash book/bank statements | |
| – confirm that no deferred or contingent consideration is receivable in the future | |
| – confirm that the profit on disposal is correctly disclosed as part of profit for the year | |
| – confirm that all necessary notes are given in the group financial statements | |
| – obtain the parent company’s statement of financial position to confirm that the cost of investment is derecognised | |
| – reperform the calculation of profit on disposal in the individual financial statements | |
| – reconcile the profit on disposal recognised in the parent company’s financial statements to the profit recognised in the group financial statements | |
| – obtain management’s estimate of the tax due on disposal, reperform the calculation and confirm the amount is properly accrued at parent company and at group level | |
| – review any correspondence with tax authorities regarding the tax due | |
| – if the tax is paid in the subsequent events period, agree to cash book and bank statement | |
| maximum marks | 8 |