Examination procedures

1 mark for each described procedure. Also allow 1 mark for relevant analytical procedures used in the explanation of procedures.

– Agreement that the accounting policies used in preparing the forecast information are consistent with those used in historical financial information and comply with IFRS
– The forecast should be cast to confirm accuracy
– Review of capital expenditure forecasts
– Quotations received from potential suppliers of the new technology should be reviewed
– The time frame of the work to be carried out needs to be discussed with management
– Review of market research documents and review of prices charged by competitors
– Analytical review followed by discussion with management on the trend in revenue
– Revenue is forecast to increase by 22•9% and 7% in the years to 30 April 2015 and 2016 respectively
– Analytical review of the composition of operating expenses
– In 2014, operating expenses are 80•7% of revenue, but this is forecast to reduce to 73•4% in
2015 and to 69•8% in 2016
– Recalculation of depreciation expense and agreement to forecast statement of financial position
– Recalculation of finance cost to ensure that interest payable with confirmation of the rate of interest to bank documentation

Maximum marks 8