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Procedures

Accounting estimates

There are many accounting estimates in the financial statements, e.g.
allowances for receivables, depreciation of property, plant and
equipment, provisions, etc.

Accounting estimates are inherently risky because they are about the
future, are often not supported by documentary evidence and therefore
accuracy may not be able to be verified.

11.1 Key assertions

 Completeness

 Accuracy / valuation

 Cut-off

11.2 Sources of evidence

 Board minutes

 Enquiry with management

 Written representation

 Cash book / bank statements

 Purchase invoices

11.3 Key areas to consider

 Basis of estimate

 Scope for manipulation

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