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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 receivable All accounts receivable Accounts receivable Accounts receivable have been Accounts receivable Accounts receivable have
have been recorded in the amounts represent recorded at their proper amount and represent amounts owed to been properly classified,
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 sheet date, and the client is the financial statements
performance of services valuation (including correct subject to substantially all
existing at the balance sheet translation of foreign currency the risks and is entitled to
date balances) in accordance with substantially all the rewards
generally accepted accounting arising therefrom
principles

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 recorded Deferred revenue represents Deferred revenue has been
been recorded in the has been recorded in the at its proper amount and reflects all revenue due to the client properly classified,
financial statements financial statements events and circumstances that affect relating to future period(s) described and disclosed in
their underlying valuation in the financial statements
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,
financial statements sheet date which can reflect all events and circumstances relating to future period(s) described and disclosed in
reasonably be expected to that affect their underlying the financial statements
benefit future periods valuation 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,
recorded in the financial have been incurred and have amount to reflect amounts due to at the balance sheet date described and disclosed in
statements not been discharged or suppliers (including changes in the financial 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 Inventory balances have been The client is responsible for Inventory has been properly
materials, work in inventory have been amounts in the balance sheet recorded at their proper amount and substantially all the risks and classified, described and
progress, finished recorded in the financial are 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 the rewards arising from statements
progress at the balance sheet valuation in accordance with ownership of inventory
date generally 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 equipment at the balance properly classified,
recorded in the financial valuation in accordance with sheet date. It is responsible described and disclosed in
statements generally accepted accounting for substantially all the risks the financial statements
principles and is entitled to
substantially all the rewards
Appropriate accumulated of ownership therefrom
depreciation allowances are
established for depreciable assets

Revalued amounts are supported by


proper valuations

Appropriate adjustments have been


* 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*
recorded to reflect impairments in
value
Treasury and
cash
managemen
t
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 have
balances have been represent cash on hand or recorded at their proper amount and and cash deposits and been properly classified,
recorded in the financial held on deposit by third reflect all events and circumstances overdrafts and short-term described and disclosed in
statements parties at the balance sheet that affect their underlying borrowings represent the financial statements
date valuation (including changes in obligations of the client, at
foreign 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 the at the balance sheet date recorded at their proper amount and rights in respect of genuine been properly classified,
financial statements reflect all events and circumstances underlying entities described and disclosed in
that affect their underlying the financial statements
valuation in accordance with The client has title to all
generally accepted accounting identified securities and to
principles all rights arising from them

Carrying values have been correctly All encumbrances to title


calculated, and provision has been have been identified
made for carrying values in excess
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

* 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*
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 pledged
recorded in the financial balance sheet date amount and reflect all events and is entitled to substantially all collateral have been properly
statements circumstances that affect their the rewards arising from classified, described and
underlying valuation in accordance ownership of derivative disclosed in the financial
with generally accepted accounting financial instruments statements
principles and any valuation
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 the future benefits existing at recorded at their proper amount properly classified,
financial statements the balance sheet date described 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,
financial statements reflect all events and circumstances is entitled to substantially all described and disclosed in
that affect their underlying the rewards arising from the financial statements
valuation in accordance with ownership of intangible
generally accepted accounting assets
principles.
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 balance recorded at their proper amount and substantially all the risks and been properly classified,
recorded in the financial sheet date reflect all events and circumstances is entitled to substantially all described and disclosed in
statements that affect their underlying the rewards arising from 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*
valuation in accordance with intercompany balances
generally 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 the exist at the balance sheet proper amount and reflect all events is entitled to substantially all properly classified,
financial statements date and circumstances that affect their the rewards arising from described and disclosed in
underlying valuation in accordance ownership of investments in the financial 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,
financial statements balance sheet date described and disclosed in
the financial statements
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,
the financial statements balance sheet date circumstances that affect their the rewards arising from described and disclosed in
underlying valuation in accordance contingencies and other the financial 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 balance have been recorded at their proper substantially all the risks and accounts have been properly

* 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*
been recorded in the 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,
statements circumstances that affect their the rewards arising from described and disclosed in
underlying valuation in accordance options and other the financial 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,
and other benefit financial statements amounts and reflect all events and is entitled to substantially all described and disclosed in
plans circumstances that affect their the rewards arising from the financial statements
underlying valuation in accordance ownership of pension, post-
with generally accepted accounting retirement and other benefit
principles. plans
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 the term contracts represent contracts have been recorded at substantially all the risks and been properly classified,
term contracts 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 the financial statements
and costs incurred their underlying valuation in long term contracts
accordance with generally accepted
accounting principles and
appropriate adjustments have been
made to the valuation where
necessary

* 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 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 classified, described and
and/or services have been determined, summarised amounts derived from the accounting period correct accounts disclosed in the financial
recorded in the financial and recorded in the sale of goods and/or the statements
statements financial statements 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
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 described and disclosed in
statements summarised and of the business accounting period correct accounts the financial statements
recorded in the financial
statements
Finance

* 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

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