Monday, April 21, 2014

Accrual not recorded

More often than not, there are certain accrual for expenditure need to be made by the Company - for instance, accrual maybe made for services received before year-end, but suppliers' invoices not received. Hence, accrual need to be accordingly. There could also be instances where accrual be made for potential expenditure relating to the current financial year.

Often, our consideration as auditor is about the completeness of accrual - it is important to educate management of audit client that to set up a process in place to identify and review the reasonableness of accruals.

As the reviewer of audit file, it is also important to think from the big picture perspective on the completeness of accrual items before going into details (i.e. assessing and evaluating the basis) - an oversight of the accrual is important to identify missing accrual item, if any.

A good understanding of business and development during the year can also help to identify potential accrual not recorded.


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