CLIENT:
AUDIT PROGRAM
_____________________________________________________
PERIOD:
_____________________________________________________
SUBJECT:
INTANGIBLE ASSETS
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
AUDIT OBJECTIVES
To determine whether:
A.
B.
C.
These represent company’s ownership of such assets
which is evidenced by legal documents or otherwise.
These are valued at fair values and any amortization is
appropriately recorded and presented.
These are properly described and classified in the
balance sheet, and disclosures have been made for any
restrictions against the assets and adequate disclosures
have been made in accordance with the Companies
Ordinance, 1984 and the relevant IASs.
SUBSTANTIVE PROCEDURES
1. Overall Analytical Review
1.1
1.2
1.3
1.4
Obtain the schedule of all intangible assets and its
amortization. Foot and trace ending balances to the
lead schedule. Tie the additions, retirements and
amortization provision for the year to supporting
schedules.
Discuss with appropriate client personnel the
company’s policies for capitalizing and amortizing
intangible assets. Consider the acceptability of the
stated policies and the relationship of the intangible
assets to the client’s business. Evaluate any changes in
policy as to whether they constitute a change in
accounting principles or otherwise require disclosure
in the financial statements.
For all major additions, obtain a listing of additions
and review whether the intangible assets are acquired
or self generated.
Ensure that internally generated goodwill, brands,
masthead, publishing titles, customers list and items
similarly substance have not been recognized as an
intangible asset.
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Comments/Explanations
CLIENT:
AUDIT PROGRAM
_____________________________________________________
PERIOD:
_____________________________________________________
SUBJECT:
INTANGIBLE ASSETS
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
2. Movement / Additions during the year
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
Have the client prepare an analysis of activity in
intangible assets for the period and reconcile it to the
general ledger control accounts, including the
following information:
 A description of each intangible asset;
 Method of amortization;
 Balances at the beginning and end of the
period;
 Additions;
 Transfer, sales; and
 Amounts amortized or written off.
Where applicable, verify the value of the intangible
assets with patents and other third party documents.
Ensure that we have obtained a detail of cost
comprising the internally generated intangible assets
and ensure that the cost includes the following:
 Expenditure on material and services;
 Salaries, wages and other employment related
costs;
 Any expenditure that is directly attributable to
generating the asset; and
 Overheads that are necessary to generate
asset.
Ensure that following costs have not been added to the
aforesaid cost:
 Selling and other administrative and general
costs; and
 Other cost that is not directly related to
intangible assets.
Verify the clerical accuracy of the analysis. Trace
beginning balances to prior period’s working papers
and cross-reference ending balances and amounts
amortized or written off to the applicable lead
schedules.
Examine critical forms and documents (
) to
support additions to intangible assets. Discuss with
client personnel the criteria used to establish the
amortization period for current period additions.
Determine that the recorded amounts and amortization
periods assigned are proper. Scope: (
)
Examine support for other significant activity in the
accounts during the period.
Obtain details of any transfer / sales of intangible
assets and verify.
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Comments/Explanations
CLIENT:
AUDIT PROGRAM
_____________________________________________________
PERIOD:
_____________________________________________________
SUBJECT:
INTANGIBLE ASSETS
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
3. Amortization
3.1
3.2
3.3
3.4
3.5
3.6
Compute the percentage of amortization of intangible
assets for the current period to total intangible assets
as of the balance sheet date. Compare the percentage
with similar percentages for prior periods. Investigate
significant or unusual fluctuations.
Perform a predictive test of the total amortization of
intangible assets for the current period. Compare the
predicted amount with the recorded amount and
investigate any significant variations by reference to
the supporting detail.
Note that estimated useful lives and amortization
methods are consistent with those used in the prior
period and other companies within the industry.
Ensure that the maximum period for the amortization
has not exceeded 20 years and amortization should be
on straight line basis only. Also examine whether the
method of amortization of intangible assets is in
accordance with IAS-38.
Foot the supporting detail of the amounts amortized
during the current period and tie it to the analysis.
Recalculate the current period amortization for a
sample of items in the supporting detail.
Scope: (
)
4. Revaluation
In case where the intangible asset is revalued ensure
that the whole class of assets has been revalued and
any surplus on revaluation has been directly credited
to revaluation surplus in accordance with the relevant
IAS.
5. Impairment
5.1
5.2
Have the management review the economic life of the
intangible asset and in case where it is felt that the
future economic benefits will not accrue to the
company, ensure that the remaining cost has been
charged to profit and loss account immediately or the
carrying amount is appropriately written down.
Discuss with management the continuing value of the
unamortized balances of intangible assets. Determine
whether they appear reasonable in relation to the
external environment in which the entity operates and
any relevant data that might be obtained as a result of
other auditing procedures.
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Comments/Explanations
CLIENT:
AUDIT PROGRAM
_____________________________________________________
PERIOD:
_____________________________________________________
SUBJECT:
INTANGIBLE ASSETS
Est.
Hrs.
Phase/
Level
W/P
Ref.
Procedures
L/AP/1
By
Comments/Explanations
Other tests as deemed necessary
Management Letter
Prepare management letter points including:





Internal control weaknesses;
Business improvement opportunities;
Legal non-compliance;
Accounting system deficiencies; and
Errors and irregularities not material at the
financial statements level.
Disclosure
Ensure appropriate disclosure have been made in
accordance with the reporting framework and fill
relevant portion of Financial Statements Disclosure
Checklist (FSDCL).
Supervision, review and conclusion
1.
2.
3.
4.
Perform Senior review and supervision.
Resolve Senior review points.
Resolve Partner and Manager review points.
Conclude response to the audit objectives.
Audit conclusion
Based on the substantive test procedures, I/we performed as outlined above, it is my/our opinion that the audit objectives set forth at
the beginning of this audit program have been achieved, except as follows:
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
Date:____________
______________
Signature
___________
Job Incharge
Page: 4/4
________
Manager
_______
Partner