- 3 Marks
Question
Explain the significant audit procedures to be performed during the final audit in respect of the estimated warranty provision in the statement of financial position of Manuf Co. as at 31 March 2019. (3 marks)
Answer
- Review and test the process used by management to develop the estimate.
- Review contracts or orders for the terms of the warranty to gain an understanding of the obligation of Manuf Co.
- Perform analytical procedures to compare the level of warranty provision year on year, and compare actual to budgeted provisions.
- Re-calculate the warranty provision.
- Compare prior year provision with actual expenditure on warranty claims in the accounting period.
- Compare the current year provision with prior year and discuss any fluctuation with Odo Pa Nye.
- Topic: Audit evidence, Evaluation and review
- Series: NOV 2020
- Uploader: Kwame Aikins