You have recently been promoted from Assistant Audit Manager to Audit Manager in December 2021. As Audit Manager, you are currently busy with the audit of Thandi Ventures (Thandi) for the year ended 30 June 2022 and have been on the audit of Thandi for several previous years. Thandi was listed on the Johannesburg Stock Exchanges (JSE) mainboard in 2015. The nature of Thandis activities demands a material investment in fixed assets. Thandi specialises in constructing roads, bridges, and buildings. In the current 2022 financial year, Thandi started with a new venture which entails the construction of fuel storage facilities. The Financial Manager informed you that Thandi is growing exceptionally well, and the sales are at an all-time high. He also mentioned that all top-level management received bonuses based on profit for the year.

Note 4: Provision for bonuses to employees During the previous 2021 financial year, employees did not receive bonuses due to the severe impact of Covid-19. The Managing Director announced in December 2021 that all salaried employees (excluding directors) would receive a bonus for the current 2022 financial year. The payment of the bonuses will take place at the end of July 2022, after the financial year-end. The thirteenth cheque will be based on employees salaries for December 2021 and will be pro-rata based on the number of months in service between 1 January 2021 and 31 December 2021. Only employees that commenced employment prior to 1 January 2022 will qualify for the bonuses, given that the employee is still in employment at the end of July 2022 when the bonuses are paid out. Management plans to recognise a Provision for employee bonuses in the financial statements on 30 June 2022. The carrying amount will be measured at the amount management expects to pay out in bonuses on 31 July 2022.

Formulate the substantive procedures that you will perform in respect of Note 4: Provision for bonuses to employees in the statement of financial position of Thandi Ventures