ACCA AAA INT Syllabus D. Audit of Historical Financial Information - Auditing Provisions - Notes 21 / 41
Audit procedures & Evidence needed as follows
Procedures would include:
Obtain written evidence from legal advisors that in their opinion amounts are probable to be paid, and the basis of that opinion
Review the claim itself to confirm the amount
Inspect the board minutes for evidence of discussion of the claim, to obtain an understanding as to the reason for the claim and whether it has been disputed
Auditing Insurance claims (Contingent Assets)
Obtain a copy of the insurance claim made and confirm the amount claimed
Enquire as to the basis of the amount claimed
Review any supporting documentation such as management accounts showing lost income for the period of halted production
Scrutinise the terms of the insurance policy, to determine whether covered
Seek permission to contact the insurance provider to enquire as to the status of the claim, and attempt to receive written confirmation of the likelihood of any payment being made
Review correspondence between the client and the insurance provider, looking for confirmation of any amounts to be paid
Contact client lawyers to enquire if there have been any legal repercussions arising from the insurance claim, e.g., the insurance company disputing the claim