Lecture 10 Flashcards Preview

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Flashcards in Lecture 10 Deck (18)
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1
Q

Audit budget (3)

A
  • Cost of audit: staff costs/ expenses/ KGS
  • Compare to audit/ interoffice fee
  • Done twice a year
2
Q

WIP

A

Driven by timesheets

3
Q

Gross WIP =

A

Staff costs + Expenses + 2.5% staff costs

4
Q

Valuated hours =

A

2.5% staff costs

5
Q

Net WIP =

A

WIP after provision

6
Q

Net net WIP =

A

WIP after provision and billing to date (true exposure)

7
Q

Provisioning =

A

Bad debt provision against WIP when debtor not going to be fully recovered. Highlights WIP balances still to be billed

8
Q

POA/ FOA

A

Payment/ fees on account.

Invoices raised during audit before all work completed.

9
Q

At end of audit…

A

Final fee raised and all POA on balance sheet taken to income

10
Q

Final fees

A

Remaining to bill at end of audit

11
Q

WIP =

POAs =

A

Asset

Liability

12
Q

Conversion

A

Can choose to take WIP/POAs to P&L before end of audit. Usually only on larger clients.

13
Q

Write off =

A

Clearing down code, bad debt

14
Q

KPI - Recovery % - Profitability

A

EP = Engagement profitability

(Total fees/ total costs) x 100

15
Q

KPMG EP =

A

60%

16
Q

KPI - Net sales per hour

A

Fee earned for every hour worked

= Sales / hours charged

17
Q

KPI - Lock up

A

What’s sitting in balance sheet

= WIP lock up + debtors lock up

18
Q

KPI - Utilisation

A

Chargeable vs available time