Page 118 - AAA Integrated Workbook STUDENT S18-J19

Chapter 8 4

Auditing the consolidation schedule

4.1 Audit procedures

 Agree the figures from the component financial statements into the
consolidation schedule to ensure accuracy.

 Recalculate the consolidation schedule to ensure arithmetical accuracy.

 Recalculate the translation of any foreign components to ensure accuracy.

 Recalculate any non-controlling interest balances to verify accuracy.

 Agree the date of any acquisitions or disposals and recalculate the time
apportionment of the results for these components included in the consolidation.

 Evaluate the classification of the component (i.e. subsidiary, associate, joint
venture etc.) to ensure this is still appropriate.

 For investments in associates ensure that these are accounted for using the
equity method of accounting and not consolidated.

 Review the financial statement disclosures for related party transactions.

 Review the policies and year-ends applied by the components to ensure they
are consistent across the group.

 Reconcile inter-company balances and ensure they cancel out in the group
financial statements.

 Assess the reasonableness of the client's goodwill impairment review to ensure
goodwill is not overstated.

 Calculate any goodwill on acquisition arising in the year paying special attention
to:

 Consideration paid – agree to bank statements.

 Acquisition related costs – ensure they have been expensed and not
capitalised.

 Contingent consideration – whether this has been valued at fair value
taking into account the probability and timing of payment.

 Deferred consideration – should be discounted to present value.

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