Question: ABC Bank is one of the second-tier banks in Hong Kong, providing a variety of banking services and products to a broad range of customers in Hong Kong and Mainland China. You are an audit manager at Wong & Co, a firm of Certified Public Accountants. You have been engaged for the financial statements audit of ABC for the year ended 31 December 2014. You found ABC included an accruals and other payable of HK$1 million at 31 December 2014. It is an estimate of losses from a former employee's compensatory claim (lost wages) against the company in the amount of HK$2 million. The former employee claimed that ABC wrongfully terminated her as a result of her whistleblowing.
Required: Explain your procedures in auditing the provision.