(b) Explain the principal audit procedures to be performed during the final audit in respe

(b) Explain the principal audit procedures to be performed during the final audit in respect of the estimated

warranty provision in the balance sheet of Island Co as at 30 November 2007. (5 marks)

(b) ISA 540 Audit of Accounting Estimates requires that auditors should obtain sufficient audit evidence as to whether anaccounting estimate, such as a warranty provision, is reasonable given the entity’s circumstances, and that disclosure isappropriate.