Start of Day 4 Quiz

Which of the following are forms of IPE?

• Purchase invoices scanned in by client

• Fixed asset register shared on inflo by the client

• Trial Balance uploaded through inflo connecter

• Bank letter from Natwest

We have obtained the additions listing from the client. It is made up of 10 invoices, totalling £100k.

Materiality is £90k

What would be the best sampling method?

• Select specific items so that untested balance is below PM

• Statistical sample using calculator

• Judgemental sample

Answer explanation

A statistical sample will always give a minimum sample size of 5.

Therefore a more efficient sampling method here would be to select the largest invoice so that untested is below PM.

We have obtained the bank letter, and it has a trivial difference to the bank balance per TB.

Do we need to obtain the bank reconciliation from the client?

• YES

• NO

Answer explanation

We must obtain the bank reconciliation.

Whilst the difference between bank letter and TB may be trivial, this could be made up of multiple material reconciling items, which are netting off.

Can we rely on bank statements sent to us by the client, as confirmation of the bank balance at year end?

• YES

• NO

Answer explanation

We should always be getting confirmation directly from the bank. Whether this be via:

1. 1. Bank letter

2. 2. Otter/Circit

Which of the following are tangible fixed assets?

• Computer software

• Land

• Licenses

• Machinery

ABC Limited have bought a new car for £50,000. They have decided to depreciate the asset over a period of 4 years, with a residual value of £10k.

What would be the NBV at the end of year 1?

• £10,000

• £20,000

• £30,000

• £40,000

Answer explanation

£50,000 - £10,000 - £40,000

£40,000 / 4 years = £10,000 depreciation per annum

£50,000 - £10,000 = £40,000

We have selected a sample of fixed asset additions to confirm existence.

What documentation would we request from management?

• Sales invoices

• Bank statements

• Purchase Invoices

What digital tool do we use to review and reconcile our debtors ledger?

• Inflo

• AAA Raptor

• LEAP

• Sampling calculator

What TWO of the following options could we use to confirm the existence of a trade debtors?

• Internal despatch note

• Signed delivery note

• Bank statement with remittance

What evidence would we request to test a sample of prepayments?

• Sales invoices

• Purchase invoices

• Bank statements

• Purchase orders