Audit Evidence $-$ In class end of chapter review $-$ ACCA extracted $(5\%)$

ILOs $($A$3,$ B$1,$ C$1,$ D$1,$ D$2,$ D$3,$ D$4)$

C$.$ You have identified that a number of tests were carried out in relation to the additions to property, plant and equipment. Match the tests set out below to the assertion they test.

Existence Accuracy,

valuation and allocation

Rights and obligations

a$.$ Recalculate depreciation and ensure it is in line with company policy.

b$.$ Physically verify a sample of additions listed in the non$-$current assets register.

c$.$ Scrutinise the addressee on the supplier invoices in relation to the additions.

D$.$ Which of the following is NOT a suitable procedure in relation to the equity issued in the year?

a$.$ Direct confirmation with new shareholders

b$.$ Review board minutes to confirm shares issued

c$.$ Inspect bank statements$/$cash books for evidence of cash received

d$.$ Recalculate split of proceeds between nominal value and share premium and agree to financial statements.

E$.$ Which TWO of the following statements concerning the impact of the issue of equity in the year are TRUE?

a$.$ The issue of equity during the year gives rise to the audit risk that the directors may have manipulated the financial statements to give a better view of the company's position.

b$.$ The issue cannot cause a material misstatement in the financial statements.

c$.$ Auditors have a duty to ensure that the issue was valid and in accordance with the company's constitution.

d$.$ The issue of equity gives rise to a risk of material misstatement arising from disclosures in the financial statements.