Disclosures

In this lesson

1. 0:00 Segmental reporting requirements and disclosures
2. 1:04 Audit procedures for segmental information
3. 2:55 Earnings per share calculation and verification
4. 3:50 Audit procedures for EPS disclosures
5. 4:45 Accounting policy changes and audit approach

About this lesson

You'll discover the audit procedures required to verify each disclosure, including how to identify management bias in segment identification, recalculate EPS figures, and assess whether accounting policy changes are properly justified and disclosed. Understanding these procedures will strengthen your professional scepticism and help you perform thorough, confident audits of complex financial statement notes. The lesson covers segmental reporting under IFRS 8, which requires listed companies to disclose revenue, profit, and net assets by business class and geography for segments exceeding 10% significance thresholds. You'll learn practical audit procedures: obtaining and corroborating management workings, discussing the basis for segmentation against internal reporting, comparing prior year assumptions, and recalculating the 10% significance tests to detect potential management bias or hidden loss-making segments. For earnings per share, you'll understand the distinction between basic EPS (profit after tax divided by weighted average shares) and diluted EPS (accounting for convertible debt and share options). The audit procedures include recalculating both figures, verifying profit and share data to the financial statements, confirming consistency with prior years, and identifying any changes requiring disclosure. Finally, you'll learn how to audit accounting policy changes, which must be applied retrospectively and disclosed only when they provide more relevant or reliable information. Your audit work includes discussing the rationale with management, verifying correct retrospective application, and ensuring appropriate disclosure of the effect on prior year figures and the reason for change.

Duration: 6m