Substantive Procedures for Depreciation:

1. Review Depreciation Policy:
   Review the company’s depreciation policy to ensure that the depreciation rate of 10 years for the new leisure equipment is reasonable and in line with industry norms.
2. Recalculate Depreciation:
   Select a sample of assets from the fixed asset register, and recalculate the depreciation charge for the year using the straight-line method to ensure accuracy.
3. Capital Expenditure Documentation:
   Review supporting documentation for the capital expenditure incurred (e.g., invoices, purchase contracts) to verify the cost and date of acquisition of the new equipment.
4. Comparison with Useful Life:
   Compare the useful life of similar assets within the industry to determine if the 10-year depreciation period is appropriate.
5. Analytical Procedures:
   Perform analytical procedures to compare the depreciation expense for the current year with prior years, taking into account the significant capital expenditure, to identify any unusual trends.

Substantive Procedures for Food Poisoning Claim:

1. Review Legal Correspondence:
   Obtain and review correspondence between the company and its legal advisers regarding the claim to understand the likelihood of success and whether the claim is likely to result in a financial obligation.
2. Examine Board Minutes:
   Review the minutes of board meetings to identify discussions about the lawsuit and to assess management’s judgment on the likelihood of the claim being successful.
3. Post-Year-End Payments:
   Inspect the post-year-end period for any payments made to settle the claim or further correspondence regarding the claim to assess if the lawsuit has progressed.
4. Management Representation Letter:
   Obtain a written representation from management confirming their view that the lawsuit is unlikely to succeed and that no provision is required.
5. Contingent Liability Disclosure:
   Review the financial statements to ensure appropriate disclosure of the contingent liability in accordance with IAS 37, even if no provision is made.

(Total: 6 marks)

ii

1. Name of the Client and Year-End Date:
   • Purpose: Clearly identifies the entity being audited and the financial year or period under audit. This ensures that the working papers are properly referenced to the correct audit engagement and period.
2. Title/Subject of the Working Paper:
   • Purpose: Provides a brief description of the topic covered by the working paper, such as “Depreciation of Fixed Assets” or “Food Poisoning Legal Claim,” to indicate the specific area of the financial statements being addressed.
3. Preparer’s Name and Date:
   • Purpose: Identifies the individual responsible for preparing the working paper and the date the work was performed, allowing for follow-up in case of queries or for future reviews.

(Total: 3 marks)