ExpertACCA · Question 12 · Audit Evidence
CASE SCENARIO: Global Freightways PLC
Global Freightways PLC is a cross-border logistics and shipping multinational. You are the audit senior for the year ended 31 March 20X7. The company has complex revenue recognition policies due to shipments spanning multiple accounting periods. Furthermore, they hold significant foreign currency bank accounts. Global Freightways relies heavily on a bespoke, automated IT system called 'Track-It' to record shipments, calculate freight charges, and generate invoices automatically based on weight and distance.
QUESTION:
Which of the following is the most appropriate substantive procedure to verify the valuation of the foreign currency bank accounts at the year-end?
CASE SCENARIO: Global Freightways PLC
Global Freightways PLC is a cross-border logistics and shipping multinational. You are the audit senior for the year ended 31 March 20X7. The company has complex revenue recognition policies due to shipments spanning multiple accounting periods. Furthermore, they hold significant foreign currency bank accounts. Global Freightways relies heavily on a bespoke, automated IT system called 'Track-It' to record shipments, calculate freight charges, and generate invoices automatically based on weight and distance.
QUESTION:
Which of the following is the most appropriate substantive procedure to verify the valuation of the foreign currency bank accounts at the year-end?
Answer options:
Send a bank confirmation letter to the foreign banks.
Agree the year-end exchange rate used by the client to an independent financial source and recalculate the translation.
Vouch a sample of foreign currency payments made during the year to supporting invoices.
Review the bank reconciliation for the foreign currency accounts.
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