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Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and
disclosure*
Sales, marketing
and
receivables
Accounts All accounts receivable Accounts receivable Accounts receivable have been Accounts receivable Accounts receivable have
receivable have been recorded in amounts represent recorded at their proper amount and represent amounts owed to been properly classified,
the financial statements enforceable claims for the reflect all events and circumstances the client at the balance described and disclosed in
sale of goods or the that affect their underlying valuation sheet date, and the client is the financial statements
performance of services (including correct translation of subject to substantially all
existing at the balance sheet foreign currency balances) in the risks and is entitled to
date. accordance with generally accepted substantially all the rewards
accounting principles arising therefrom

Any adjustments for doubtful


accounts, discounts, returns and
similar items are adequate but not
excessive
Deferred revenue All deferred revenue has Only valid deferred revenue Deferred revenue has been Deferred revenue represents Deferred revenue has been
been recorded in the has been recorded in the recorded at its proper amount and revenue due to the client properly classified, described
financial statements financial statements reflects all events and relating to future period(s) and disclosed in the financial
circumstances that affect their statements
underlying valuation in accordance
with generally accepted accounting
principles.

Revenue recognition policy is in


accordance with GAAP
Purchasing and
payables
Deferred charges All deferred charges have Deferred charges represent Deferred charges have been Deferred charges represent Deferred charges have been
been recorded in the costs incurred at the balance recorded at their proper amount and charges owing by the client properly classified, described
financial statements sheet date which can reflect all events and circumstances relating to future period(s) and disclosed in the financial
reasonably be expected to that affect their underlying valuation statements
benefit future periods in accordance with generally
accepted accounting principles.

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation

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Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and
disclosure*
Accounts payable All accounts payable Accounts payable balances, Accounts payable balances have Accounts payable represent Accounts payable have been
balances have been representing liabilities that been recorded at their proper liabilities owing by the client properly classified, described
recorded in the financial have been incurred and amount to reflect amounts due to at the balance sheet date and disclosed in the financial
statements have not been discharged or suppliers (including changes in statements
settled, exist at the balance foreign currency exchange rates) in
sheet date accordance with generally accepted
accounting principles.
Production
Inventory – raw All items or quantities of Recorded inventory amounts Inventory balances have been The client is responsible for Inventory has been properly
materials, work in inventory have been in the balance sheet are recorded at their proper amount and substantially all the risks and classified, described and
progress, finished recorded in the financial represented by physical reflect all events and circumstances is entitled to substantially all disclosed in the financial
goods, resale statements inventory or work in that affect their underlying valuation the rewards arising from statements
progress at the balance in accordance with generally ownership of inventory
sheet date accepted accounting principles

All slow moving, damaged or


obsolete inventory has been
properly identified and any
necessary valuation adjustments
appropriately recorded
Property, plant and All property, plant and Property, plant and Property, plant and equipment The client has valid title to Property, plant and
equipment equipment, including equipment physically exists reflect all events and circumstances property, plant and equipment have been
acquisitions, has been at the balance sheet date that affect their underlying valuation equipment at the balance properly classified, described
recorded in the financial in accordance with generally sheet date. It is responsible and disclosed in the financial
statements accepted accounting principles for substantially all the risks statements
and is entitled to
Appropriate accumulated substantially all the rewards
depreciation allowances are of ownership therefrom
established for depreciable assets

Revalued amounts are supported by


proper valuations

Appropriate adjustments have been


recorded to reflect impairments in
value

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation

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Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and
disclosure*
Treasury and cash
management
Cash All bank and cash Bank and cash balances Bank and cash balances have been The client has title to bank Bank and cash balances
balances have been represent cash on hand or recorded at their proper amount and and cash deposits and have been properly
recorded in the financial held on deposit by third reflect all events and circumstances overdrafts and short-term classified, described and
statements parties at the balance sheet that affect their underlying valuation borrowings represent disclosed in the financial
date (including changes in foreign obligations of the client, at statements
currency exchange rates) in the balance sheet date
accordance with generally accepted
accounting principles

Adequate provision has been made


against bank balances whose
recoverability is in doubt

Marketable All marketable securities Marketable securities exist Marketable securities have been Recorded amounts represent Marketable securities have
securities have been recorded in at the balance sheet date recorded at their proper amount and rights in respect of genuine been properly classified,
the financial statements reflect all events and circumstances underlying entities described and disclosed in
that affect their underlying valuation the financial statements
in accordance with generally The client has title to all
accepted accounting principles identified securities and to all
rights arising from them
Carrying values have been correctly
calculated, and provision has been All encumbrances to title
made for carrying values in excess have been identified
of net realisable values
Notes and other All notes and other Notes and other receivables Notes and other receivables have The client is responsible for Notes and other receivables
receivables receivables have been exist at the balance sheet been recorded at their proper substantially all the risks and have been properly
recorded in the financial date amount and reflect all events and is entitled to substantially all classified, described and
statements circumstances that affect their the rewards arising from disclosed in the financial
underlying valuation in accordance ownership of notes and other statements
with generally accepted accounting receivables
principles
Derivative financial All derivative financial Derivative financial Derivative financial instruments The client is responsible for Derivative financial
instruments instruments have been instruments exist at the have been recorded at their proper substantially all the risks and instruments, and any
recorded in the financial balance sheet date amount and reflect all events and is entitled to substantially all pledged collateral have been
statements circumstances that affect their the rewards arising from properly classified, described
underlying valuation in accordance ownership of derivative and disclosed in the financial
with generally accepted accounting financial instruments statements
principles and any valuation

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation

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Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and
disclosure*
adjustments have been
appropriately recorded
Notes payable and All notes payable and Only valid notes payable Notes payable and long term debt Notes payable and long term Notes payable and long term
long term debt long term debt has been and long term debt, have been recorded at their proper debt represent obligations of debt have been properly
included in the financial representing amounts due to amounts and reflect all events and the client classified, described and
statements lenders under enforceable circumstances that affect their disclosed in the financial
borrowings agreements, underlying valuation in accordance statements
have been recorded in the with generally accepted accounting
financial statements principles.

Finance
Prepaid expenses All prepaid expenses Prepaid expenses represent Prepaid expenses have been Prepaid expenses have been
have been recorded in future benefits existing at the recorded at their proper amount properly classified, described
the financial statements balance sheet date and disclosed in the financial
statements
Intangible assets All intangible assets have Intangible assets exist at the Intangible assets have been The client is responsible for Intangible assets have been
been recorded in the balance sheet date recorded at their proper amount and substantially all the risks and properly classified, described
financial statements reflect all events and circumstances is entitled to substantially all and disclosed in the financial
that affect their underlying valuation the rewards arising from statements
in accordance with generally ownership of intangible
accepted accounting principles. assets
Intercompany All intercompany Recorded intercompany Intercompany balances have been The client is responsible for Intercompany balances have
accounts balances have been balances exist at the recorded at their proper amount and substantially all the risks and been properly classified,
recorded in the financial balance sheet date reflect all events and circumstances is entitled to substantially all described and disclosed in
statements that affect their underlying valuation the rewards arising from the financial statements
in accordance with generally intercompany balances
accepted accounting principles
Investments in All investments in Recorded investments in Investments in subsidiaries and The client is responsible for Investments in subsidiaries
subsidiaries and subsidiaries and affiliates subsidiaries and affiliates affiliates have been recorded at their substantially all the risks and and affiliates have been
affiliates have been recorded in exist at the balance sheet proper amount and reflect all events is entitled to substantially all properly classified, described
the financial statements date and circumstances that affect their the rewards arising from and disclosed in the financial
underlying valuation in accordance ownership of investments in statements
with generally accepted accounting subsidiaries and affiliates
principles
Accruals, All accruals, provisions Accruals, provisions and Accruals, provisions and other Accruals, provisions and Accruals, provisions and
provisions and and other liabilities have other liabilities exist at the liabilities have been recorded at other liabilities represent other liabilities have been
other liabilities been recorded in the balance sheet date their proper amounts liabilities of the client at the properly classified, described
financial statements balance sheet date and disclosed in the financial
statements

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation

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Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and
disclosure*
Current and All current year tax Current year tax amounts Current year tax amounts have been Current year tax amounts Current year tax amounts
deferred taxes amounts have been exist at the balance sheet recorded at their proper amounts represent assets and have been properly
recorded in the financial date and reflect all events and liabilities of the client at the classified, described and
statements circumstances that affect their balance sheet date disclosed in the financial
underlying valuation in accordance statements
with generally accepted accounting
principles.

Deferred tax assets are realisable


Contingencies and All contingencies and Contingencies and Contingencies and commitment The client is responsible for Contingencies and
other commitments commitments have been commitments have been have been recorded at their proper substantially all the risks and commitments have been
identified and recorded in correctly identified at the amounts and reflect all events and is entitled to substantially all properly classified, described
the financial statements balance sheet date circumstances that affect their the rewards arising from and disclosed in the financial
underlying valuation in accordance contingencies and other statements
with generally accepted accounting commitments
principles
Statutory
information
Capital and other All capital and other Capital and other equity Capital and other equity accounts The client is responsible for Capital and other equity
equity accounts equity accounts have accounts exist at the have been recorded at their proper substantially all the risks and accounts have been properly
been recorded in the balance sheet date amounts and reflect all events and is entitled to substantially all classified, described and
financial statements circumstances that affect their the rewards arising from disclosed in the financial
underlying valuation in accordance capital and other equity statements
with generally accepted accounting accounts
principles
Options and other All options and other Recorded options and other Options and other arrangements The client is responsible for Options and other
arrangements arrangements have been arrangements exist at the have been recorded at their proper substantially all the risks and arrangements have been
recorded in the financial balance sheet date amounts and reflect all events and is entitled to substantially all properly classified, described
statements circumstances that affect their the rewards arising from and disclosed in the financial
underlying valuation in accordance options and other statements
with generally accepted accounting arrangements
principles
Human resources
Pension, post- All benefit plans have Benefit plan amounts exist Benefit plan assets and liabilities The client is responsible for Benefit plans have been
retirement, medical been recorded in the at the balance sheet date have been recorded at their proper substantially all the risks and properly classified, described
and other benefit financial statements amounts and reflect all events and is entitled to substantially all and disclosed in the financial
plans circumstances that affect their the rewards arising from statements
underlying valuation in accordance ownership of pension, post-
with generally accepted accounting retirement and other benefit
principles. plans

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation

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Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and
disclosure*
Construction-type
contracts
Construction-type All long term contracts Amounts attributed to long Amounts attributed to long term The client is responsible for Long term contracts have
contracts/ Long have been recorded in term contracts represent contracts have been recorded at substantially all the risks and been properly classified,
term contracts the financial statements actual contracts for which their proper amount and reflect all is entitled to substantially all described and disclosed in
work has been performed events and circumstances that affect the rewards arising from long the financial statements
and costs incurred their underlying valuation in term contracts
accordance with generally accepted
accounting principles and
appropriate adjustments have been
made to the valuation where
necessary

Completeness Accuracy Occurrence Cut off Classification Presentation and


disclosure
Sales, marketing
and
receivables
Sales All amounts chargeable to Sales transactions have Recorded sales Sales have been Sales have been Sales have been properly
customers for goods been accurately transactions represent recorded in the correct recorded in the correct classified, described and
and/or services have been determined, summarised amounts derived from accounting period accounts disclosed in the financial
recorded in the financial and recorded in the the sale of goods and/or statements
statements financial statements the performance of
services
Production
Cost of sales All costs of sales have Cost of sales have been Recorded costs of sales Costs of sales have Cost of sales have Cost of sales have been
been recorded in the accurately determined, transactions represent been recorded in the been recorded in the properly classified,
financial statements summarised and expenditure incurred for correct accounting correct accounts described and disclosed in
recorded in the financial the purposes of the period the financial statements
statements business
Operating expenses All operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses have been
have been recorded in the have been accurately represent expenditure have been recorded in have been recorded in properly classified,
financial statements determined, summarised incurred for the purposes the correct accounting the correct accounts described and disclosed in
and recorded in the of the business period the financial statements
financial statements
Treasury and cash
management

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation


Financial statement assertions practice aid

Financial income All financial income and Financial income and Financial income and Financial income and Financial income and Financial income and expenses have
and expenses expenses have been expenses have been expense represents expenses have been expenses have been properly classified,
recorded in the financial accurately determined, income and expenditure recorded in the correct recorded in the correct described and disclosed in
statements summarised and of the business accounting period accounts the financial statements
recorded in the financial
statements
Finance
Non-operating All non-operating income Non-operating income Recorded non-operating Non-operating income Non-operating income Non-operating income and expenses
income and and expenses have been and expenses have income and expenses and expenses have and expenses have properly classified,
expense recorded in the financial been accurately represents income and been recorded in the been recorded in the described and disclosed in
statements determined, summarised expenditure of the correct accounting correct accounts the financial statements
and recorded in the business period
financial statements
Extraordinary items All extraordinary items Extraordinary items Only valid extraordinary Extraordinary items Extraordinary items Extraordinary items have been prope
have been recorded in the have been accurately items have been have been recorded in have been recorded in described and disclosed in
financial statements determined, summarised recorded in the financial the correct accounting the correct accounts the financial statements
and recorded in the statements period
financial statements
Human resources
Payroll All payroll costs have been Payroll expenses have Payroll costs represent Payroll expenses have Payroll expenses have Payroll expenses have been
recorded in the financial been accurately amounts to bona fide been recorded in the been recorded in the properly classified,
statements determined, summarised employees for services correct accounting correct accounts described and disclosed in
and recorded in the rendered period the financial statements
financial statements

* Note that presentation and disclosure includes consideration of the following assertions: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation



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