Assertions about completeness deal with whether all transactions and accounts that should be presented in the financial statements are so included(AU 326.05).
Assertions about existance or occurrence deal with whether assets or liabilities of the entities exist at a given date and whether recorded transactions have occurred during a given period(AU 326.04).

Assertions

• Presentation and Disclosure
• Existance or Occurrence
• Rights and Obligations
• Completeness
• Valuation or Allocation

• Revenue Cycle

  A well-designed plan of organization separates the duties of authorization,recordkeeping and custody of assets.
  

  Objective	Internal Control	Test
  Authorization	Credit approval occurs before shipment is authorized.	Examine appropriate document.
  	Existance of a cash discount policy.	Discuss policy with management and review sales orders for evidence of compliance.
  	Approval of cash discounts and adjustments.	Examine remittance advices for proper approval.
  	Sales prices are from authorized price list or executed contract.	Compare sales invoice prices to appropriate price list or contract.
  Varidity	Prenumbered sales invoices.	Account for numerical sequence of sales invoice.
  	Sales are supported by authorized shipping documents and approved customer orders.	Examine supporting bills of lading and customer orders.
  	Monthly statements are mailed to customers.	Observe mailing of statements.
  	Independent follow-up of customer complaints.	Examine customer correspondence files.
  	Separation of the functions of cash handling and recordkeeping.	Observation.Discuss with management and review employee job description.
  	Shipment is acknowledged by shipping department.	Examine acknowledgment on sales order copy.
  Proper Recording	[Completeness]Shipping documents are prenumbered.	Accounting for numerical sequence of shipping documents.Trace documents to recording of sales and accounts receivable subsidary ledger.
  	[Classification]A chart of accounts is used and is adequate.	Preview adequacy and use of proper accounts.Examine if sales documents to determine if sales transactions are properly classified.
  	[Timing]Cash receipts are recorded immediately and deposited on a daily basis.	Observation.Trace totals to duplicate deposit slips.
  	[Completeness]Sales invoices and credit memoranda are prenumbered..	Account for numerical sequence of sales invoices and credit memoranda.
  	[Valuation,Completeness,Classification]Internal verification of invoice preparation invoice preparation and posting.	Observation.Discuss policy with management.
  Accountability and Comparison	Independent reconciliation of bank statement.	Examine documentation of verification.
  	Cash register totals are verified by persons not having access to cash or cash records.	Examine documentation of verification.
  	Cash receipts are recorded immediately to establish accountability.	Observe the cash receiving process.
  	A list of checks is prepared as the mail is opened.	Observation.Compare check listing total to dulicate deposit slip.
  Protection and Limited Access	Persons receiving or otherwise handling cash are bonded.	Discuss with management.Review appropriate documentation of bonding.
  	Check are immediately endorsed.	Observation.
  	Separation of cash handling and recordkeeping functions.	Observation.Discuss with management and review employee job description.

• Disbursement Cycle

  Objective	Internal Control	Test of Control
  Authorization	Appropriate approval is required for all purchases.	Examine supporting documentation for indication of approval.
  	Payment approval required before check singning.	Observation.Examine documentation for indication of approval.
  	Authorized signature on checks.Two signitures on large check.	Select a sample of large disbursements from from the cash disbursements journal and examine the correlating canceled checks for two signitures.
  Validity	Purchases are supported by purchases requisition,purchase order,receiving report and vender invoice.	Examine supporting documentation for vouchers.
  	Documentation is canceled to prevent reuse.	Examine documentation for indication of cancellation.
  	Receiving reports are prenumbered.	Account for numerical sequence of receiving reports.
  	Receiving reports are required before approval of invoice for payment.	Discuss policy with management.Observation.Compare payment approval and receiving report dates
  Proper Recording	[Completeness]Vouchers are prenumbered.	Account for numerical ssequence of vouchers.
  	[Valuation]Internal verification of vendor invoice amounts and calculations.	Examine invoice copy for indication of clerical accuracy verification.
  	[Timing]Transactions are recorded as soon as possible after receiving goods.	[Observation]Compare purchase journal dates to receiving report and invoice dates.
  	[Completeness]Purchase orders are prenumbered.	Account for numerical sequence of purchase order.
  	[Classification]A chart of accounts is used and is adequate.	Review adequacy and use of proper accounts.Examine sales documents to determine if sales transactions are properly classified.
  Accountability and Comparison	Independent reconciliation of bank statement.	Observation.Review bank reconciliation.
  	Checks are signed only with appropriate support,by the treasurer mails the checks.	Observation.Examine canceled check signature.
  	Monthly suppliers' statements are compared to accounts payable.	Examine statements for indication of agreement.
  	Receiving department examines quantity and quality of merchandise upon reciept.	Examine copies of receiving reports and purchase orders for indication of goods received.
  	Accountability is established for unused and voided checks.	Discuss policy with management.
  Protection and Limited Access	Separation of functions between accounts payable and custody of signed checks.	Observation.Review employee job description.
  	Checks are prenumbered.	Account for numerical sequence of checks.
  	Mechanical check protector is used.	Examine check copies for evidence of check protector use.
  	Separation of purchasing department functions from receiving and recordkeeping.	Observation.Review employee job description.
  	Physical control of unused checks is properly and securely maintained.	Observation.Discuss policy with management.

• Inventry Cycle

  Objective	Internal Control	Test of Controls
  Authorization	Movement of inventory items is authorized by requisitions.	Examine requisitions for indication of approval.Inquire of client personnel.
  	Inventory purchases are appropriately authorized.	Select a sample of recorded purchases and vouch to documents authoring purchase.
  	Write-offs and write-downs of obsolete inventory are appropriately authorized.	Examine appropriate documentation for indication of authorization.
  Varidity	Receiving prepares prenumbered receiving reports.	Account for numerical sequence of receiving reports.
  	Payment for inventory is approved only after verification of quantity and prices of vender invoice.	Examine documentation for indication of verification.
  Proper Recording	[Valuation,Comppleteness]Merchandise receiving reports are matched with vender invoices.	Examine vender invoice copy for indication of agreement with receiving reports.
  	[Completeness]Purchase orders are prenumbered.	Account for numerical sequence of purchase orders
  	[Completeness]Shipping or transfer reports are prenumbered.	Account for numerical sequence of reports.
  	[Timing,Completeness,Classification]Movement of inventory items is accounted for on a timely basis by authorized requisitions.	Compare dates recorded for shipping report and requisition data of receiving department.
  	[Valuation]Clerical accuracy of vender invoices is checkd prior to payment.	Examine invoice for indication of accuracy check.
  Accountability and Comparison	Receiving department indicates inventory received on prenumbered receiving reports as to description and auntity.	Examine receiving reports.
  	Perpetual inventory records maintained for large dollar value items.	Review inventory records.Discuss policy with management.
  	Periodic comparison made between inventory records and physical inventory.	Review inventory records for indication of agreement with physical count.
  Protection and Limited Access	Inventory is stored under the control of a custdian.Access is limited.	Observation.Discuss procedures with management and custdian.
  	Inventory purchasers and handlers are bonded.	Review appropriate documentation of bonding.
  	Inventory records are maintained separate from the functions of shipping ,receiving ,and custody.	Observation.
  	Physical safeguards against theft and fire exist.	Examine physical safeguards.
  	Insurance coverage on inventory is adequate.	Review insurance policies.

• Personnel and Payment Cycle

  Objective	Internal Control	Test of Control
  Authorization	Employment is authorized before hiring.	Review hiring policies and verify the hiring authorization of a sample of employees.
  	Payment rates and hours to be worked are authorized at the appropriate levels.	Examine approval for rates or union contracts and approval for hours to be worked.
  	Deduction authorizations are obtained for each payroll deduction.	Review personnel file for authorization.
  	Personnel department authorizes all changes to payroll master file.	Review change authorizations for sample of changes made during the year.
  	Authorized signitures are required on payroll checks.	Examine payroll checks for evidence of appropriate signitures.
  Varidity	Time clock is used to record time worked by employees.	Observation.
  	Department head or foreman approves and signs time cards.	Examine time cards for indication of approval.
  	A paymaster distributes payroll checks.	Observation.Discuss policy with management.
  	Personnel department keeps personnel files on each employee.	Review personnel files.
  	Terminations are properly documented.	Review personnel files.
  Proper Recording	[Timing]Accounting procedures require recording payroll transactions as timely as possiblle.	Compare time card dates with recording date and paycheck dates for proper timing.
  	Job time tickets are reconciled to time clock cards.	Examine job time tickets for indication of reconciliation and/or approval.
  	[Classification]An adequate chart of accounts is maintained including appropriate payroll accounts.	Review adequacy and use of proper accounts.
  	[Completeness,Valuation]Calculation and amounts of payroll are internally verified.	Examine indication of internal verification.
  	[Classification]Account classification of payroll-related transactions is internally verified.	Review reconciliation of monthly payroll with labor distribution.
  Accountability and Comparison	Independent reconciliation of bank statemen for imprest payroll account.	Observation.Review reconciliation of bank statement.
  	Unclaimed payroll checks are returned to a person responsible for their custody.	Discuss policy with management.Observe distribution of paychecks.Inquire of client personnel.
  	Accountability is established for unused and voided payroll accouny checks.	Discuss policy with management and personnel responsible for check accountability.
  Protection and Limited Access	Separation of personnel,payroll,and timekeeping functions.	Observation.Discuss functions with management.
  	Use of separate imprest payroll account.	Review separate documentation such as bank statements.
  	Payroll checks are prenumbered.	Account for numerical sequence of payroll checks.
  	Treasurer signs payroll checks.	Observation.Examine canceled payroll checks.

• PP&E[Property,Plant,and Equipment] Cycle

  Objective	Internal Control	Test of Control
  Authorization	Authorization is required for all purchases over a certain amount.	Discuss policy with management.review documentation of a sample of large purchases of indication of approval.
  Validity	Major purchases require authorization by the board of directors.	Examine documentation of major purchases for approval by board.Review minutes of board meeting.
  	Movements or sales of equipment have prior approval.	Examine appropriate documentation for existence of approval.
  	Abandonments are reported to accounting department by foremen.	Discuss abandonment policy with management and foremen.
  	Purchases are supported by appropriate authorizations,purchase order,receiving report,and vendor invoice.	Examine acquisition files for supporting documentation.
  	[Classification]Policies exist for classification of fixed assets,including a policy for expensing or capitalizing items.	Examine written policies.Vouch a selected sample of capitalized and expenses disbursements for compliance with policies.
  	[Valuation,Timing]Policies exist for asset life estimations and depreciation tables used.	Review written policies.Discuss with management.Vouch a sample of items for compliance with policies.
  	[Valuation,Completeness]Depreciation charges are recorded in subsidiary ledgers and amounts are internally verified periodically.	Examination subsidiary ledgers for appropriate depreciation charges and evidence of internal verification.
  	[Timing]Accounting procedures require timely recording of purchases and associated depreciation.	Compare receiving report dates,invoice dates,and recording dates for appropriate timing.
  Accountability and Comparison	Subsidiary ledgers exist and are used.	Verify the existence of subsidiary ledgers and review entry detail for appropriateness.
  	The responsibility for small tools is assigned to individual foremen.	Review tool responsibility with management and foremen.Examine the internal verification of the existence of tools.
  	Internal verification is performed to examine existence and condition of fixed assets on a periodic basis.	Discuss policy with internal audit.Examine records for indication of verification.
  Protection and Limited Access	Equipment has identification numbers to protect against loss.	Examine assets for existence of identification numbers.
  	Insurance coverage on property,plan,and equipment is adequate.	Review insurance policies for adequacy of coverage.
  	Physical safeguards are available for protection of assets from fire and theft.	Examine physical safegurds for adequacy.

• Investing Cycle