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Most firms operate a system of charge-out rates for each member of staff, so that the bill is simply hours worked multiplied by the relevant rates. However, there are some issues: Contingency Fees We met these when studying ethics – they are banned! org 31 CHAPTER 3 – PRACTICE MANAGEMENT Lowballing This is the process of offering a very low fee in order to win business, in the hope of making the money back with increased fees in the future, or by selling additional services at a premium. In most countries, lowballing is not banned.

6), and is rarely examined at this higher level. org Chapter 4 Assignments I – the audit of financial statements SYLLABUS CONTENT 1. Planning ● 2. Evidence gathering ● 3. Assessment of risk, materiality, and other matters in the planning process. 6) Corporate Reporting is examinable here). Completion phase ● The assessment of going concern, corresponding figures, other information, subsequent events and other completion phase audit activities. org 35 C H A P T E R 4 – A S S I G N M E N T S I: T H E A U D I T O F F IN A N C I A L S T A T E M E N T S CHAPTER CONTENTS EXAM QUESTIONS ------------------------------------------------------- 38 AUDIT PLANNING ------------------------------------------------------- 39 RISK BASED APPROACHES TO AUDITING 39 RISK QUESTIONS IN THE EXAM ---------------------------------------- 42 EVIDENCE GATHERING-------------------------------------------------- 44 RELIANCE ON EXPERTS 45 PRESENTATION OF FINANCIAL STATEMENTS 45 INVENTORIES 46 CASHFLOW STATEMENTS 46 CHANGE IN POLICIES, ESTIMATES ETC.

For defined contribution schemes, the company agrees to pay money into a pension scheme now, but there is no guarantee of what it will be worth to the employee in the future. These are easy to account for, as this year’s contributions are the payment for the employee, so are recognised as incurred. The complex issue is the defined benefit scheme. In this case, it is the benefit in the future which is promised – and contributions are made in order to try to ensure that these benefits can be paid by the pension scheme.

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