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Procedures

13.3 Purchases and other expenses

 Inspect GRNs before and after the year-end and ensure they have been
recorded in the correct period: cut-off.

 Recalculate discounts and sales tax applied for a sample of large purchase
invoices: accuracy.

 Select a sample of purchase orders and agree these to the GRNs and purchase
invoices through to inclusion in the purchases day book: completeness.

Analytical procedures

 Compare expenses for each category year on year and investigate any
significant fluctuations: accuracy, completeness and occurrence.

 Compare expenses against budget and investigate any significant fluctuations.

 Calculate gross profit margin and compare with prior year to identify any
possible misstatement of purchases. Discuss any significant movement with
management: accuracy, completeness and occurrence.

 Calculate operating profit margin and compare with prior year.

 Investigate any significant fluctuations: accuracy, completeness and
occurrence.

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