GUIDANCE

1) When commenting on the effectiveness of the controls listed in addressing assertions, it should be noted that in many cases the control alone may not be sufficient to ensure that the assertion is met, and that in auditing the respective significant accounts a combination of controls may be required.

2)This control is typically used to ensure that all sales and debtors are recorded; the assertion addressed by recorded is completeness.

3) This control is typically used to ensure that all sales and debtors are real; the assertion addressed by real is occurrence for transactions and existence for assets (i.e. by ensuring that the sales transaction occurred we gain evidence that the debtor exists).

4) This control is typically used to ensure that all sales and debtors are correctly valued; the equivalent assertion for transactions is measurement; by ensuring that the transaction is correctly measured, we gain evidence that the receivable is correctly valued (hence valuation).

5) This control typically covers the real, valued, timely and recorded control objectives. Consequently, the assertions addressed for transactions are occurrence, measurement and completeness. For accounts receivable, the control would address the completeness, existence and valuation assertions since it should pick up errors where receivables have been omitted from either the debtors ledger or the GL (completeness), or wrongly included in either the debtors ledger or the GL (existence) or included in either the debtors ledger or the GL at the wrong value (valuation).

6) This control is typically used to ensure the genuineness (existence) of purchases. It could also apply to the objective of ensuring that expenses are real (occurrence).

7) The reasoning for accounts receivable under point 4 above apply here. The control would assist in ensuring that purchases (and consequently inventory and accounts payable) have not been omitted (completeness), overstated (existence) or recorded at the wrong value (valuation).

8) This control is typically used to ensure the completeness of purchases and accounts payable.

9) Again this control would assist in ensuring that the inventory purchased, and corresponding liability, are carried at the correct value (valuation).

10) This control is typically used to ensure that goods were actually received for the related invoices and consequently that the inventory and corresponding liability are real and exist (existence).

11) A very important and common control that usually addresses recorded, real, valued and timely control objectives and therefore covers completeness, occurrence and measurement assertions for transactions i.e. sales. The control would also assist in ensuring the existence and valuation of bank balances by identifying the recording of non-existent or wrongly valued receipts, as well as the completeness of bank balances by identifying cases where receipts were not recorded. Similarly, by ensuring the completeness of receipts, the control assists in ensuring the accounts receivable exist (i.e. if a customer paid and the receipt was not recorded, the receivable would be overstated). Again, if the receipt was not real, receivable would be understated.

12) This control is typically used to ensure that cash receipts are all recorded and hence addresses the completeness assertion for the related balance sheet and income statement accounts.

13) In conjunction with other controls, this control is used to ensure that transactions posted occurred (by ensuring that amount posted agreed to the journal listing), were complete (by ensuring that all items on the journal list were posted) and measured (by agree values posted). Correspondingly, for the balance sheet accounts, the Existence Completeness and Valuation assertions are addressed.

14) This control is typically used to help ensure that all payroll costs are real; the assertion addressed by real is occurrence for transactions.

15) Stock counts, ensure that all inventory items recorded in the accounting records exist and that the accounting records are complete (hence existence and completeness); as well as ensuring that cost of sales are complete (by identifying unrecorded stock deliveries) stock counts also help ensure that cost of sales are real (occurrence) by identifying non-existence deliveries).

16) Physical verification of assets is primarily used to ensure the existence of the assets; it may also be used to help determine the valuation of fixed assets by identifying unused or damaged assets.