Financial Statement Assertions Practice Aid

Financial statement assertions practice aid

Completeness Existence Valuation and allocation Rights and obligations Presentation and disclosure*

* 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

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 repres ent 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. Accounts payable All accounts payable Accounts payable balances, Accounts payable balances have Accounts payable represent Accounts payable have been

Completeness Existence Valuation and allocation Rights and obligations Presentation and disclosure* 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 recorded to reflect impairments in

Completeness Existence Valuation and allocation Rights and obligations Presentation and disclosure* value 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 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 underlying valuation in accordance ownership of notes and other statements with generally accepted accounting receivables

Completeness Existence Valuation and allocation Rights and obligations Presentation and disclosure* 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, underlying valuation in accordance ownership of derivative described and disclosed in with generally accepted accounting financial instruments the financial 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 valuation in accordance with intercompany balances generally accepted accounting

Completeness Existence Valuation and allocation Rights and obligations Presentation and disclosure* 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 Con tingencies 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 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

Completeness Existence Valuation and allocation Rights and obligations Presentation and disclosure* 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

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 be 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 expen 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 Non-operating All non-operating income Non-operating income Recorded non-operating Non-operating income Non-operating Non -operating income and e 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 be 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