Assertions Summary of FS Class

Question 1

Completeness (NCA)

Answer 1

Obtain schedule
Agree to records

Question 2

Existence (NCA)

Answer 2

Inspect assets

Question 3

Valuation (NCA)

Answer 3

Validate valuer, insurance policies
Reperform calculations

Question 4

Valuation-depreciation (NCA)

Answer 4

Review depreciation rules
Compare ratios of depreciation
Reperform calculations

Question 5

Rights and obligations (NCA)

Answer 5

Obtain documents (e.g. registration documents, certificate from solicitors, leases)

Question 6

Classification (NCA)

Answer 6

Review IAS 16

Question 7

Additions (NCA)

Answer 7

Review capitalisation of expenditure
Scrutinise NCA ledger and general ledger
Inspect non-current asset accounts

Question 8

Disposals (NCA)

Answer 8

Recalculate disposal
Verify documentation
Reasonableness of proceeds

Question 9

Completeness (inventory)

Answer 9

Trace test counts
Compare gross profit percentage
Third-party locations then physically inspect

Question 10

Existence (inventory)

Answer 10

Observe physical inventory count

Question 11

Rights and obligations (inventory)

Answer 11

What’s included in the financial statements

Question 12

Cut-off (inventory)

Answer 12

GDNs and GRNs

Question 13

Classification (inventory)

Answer 13

Distinguish between raw materials, work-in-progress and finished goods

Question 14

Completeness (Receivables)

Answer 14

Aged receivables listing and recast total
Obtain breakdown of trade receivables figure
Sample of GDNs to relevant sales invoice

Question 15

Existence (Receivables)

Answer 15

Inspect customer correspondence
Review monies
Sample of balances

Question 16

Accuracy and valuation (Receivables)

Answer 16

Compare receivables collection period

Examine credit notes

Agree monies received post year end from receivables - balance is recoverable

Question 17

Rights and obligations (Receivables)

Answer 17

Review monies received post year end from receivables - balance is due to audit client

Vouch outstanding balance back to sales invoices and GDNs

Inspect responses from direct confirmation

Question 18

Completeness (Revenue)

Answer 18

Obtain breakdown of revenue
Compare gross product percentage

Question 19

Occurence (Revenue)

Answer 19

Vouch sales invoices back to documentation

Question 20

Accuracy (Revenue)

Answer 20

Compare prices to authorised price list
Test discounts have been applied

Question 21

Completeness and existence (Bank)

Answer 21

Obtain documentation and explanations
Trace cheques
Compare cash books and bank statements and match items

Question 22

Valuation (Bank)

Answer 22

Reperform calculations
Lodgments
Contra items
Verify bank balances

Question 23

Rights and obligations (Bank)

Answer 23

Determine whether bank accounts are subject to any restrictions within management

Question 24

Classifications (Bank)

Answer 24

Consider legal right of set-off as overdrafts against positive bank balances

Ensure disclosures for bank are complete

Question 25

Completeness and existence (Payables and accruals)

Answer 25

Compare to previous years

Question 26

Rights and obligations (Payables and accruals)

Answer 26

Vouch selected amounts to documentation

Question 27

Valuation (Payables and accruals)

Answer 27

Recalculation

Question 28

Classification (Payables and accruals)

Answer 28

Review

Question 29

Existence (non-current liabilities)

Answer 29

Obtain direct confirmation from banks

Question 30

Rights and obligations (non-current liabilities)

Answer 30

Review direct confirmation letters

Question 31

Completeness (non-current liabilities)

Answer 31

Obtain breakdown of liabilities, compare to prior years Review board minutes and cash book

Question 32

Accuracy and valuation (non-current liabilities)

Answer 32

Calculation

Question 33

Classification (non-current liabilities)

Answer 33

Does it match to accounting standards

Question 34

Existence (directors' emoluments)

Answer 34

Agree director's enoluments in FS to schedule of emoluments One-off payments

Question 35

Rights and obligations (directors' emoluments)

Answer 35

Verify emoluments

Question 36

Completeness (directors' emoluments)

Answer 36

Review board meetings Review cash book during the year Confirm with directors

Question 37

Accuracy and valuation (directors' emoluments)

Answer 37

Recalculate

Question 38

Classification and presentation (directors' emoluments)

Answer 38

Obtain 3rd party documentation (copy of returns from tax authorities, local law)