The stages of auditing are as following:

Determined the audit approach:

1. The scope of the audit and auditors’ general approach should be determined. Letter of engagement setting out the terms of the audit, audit strategy to be placed on the audit file.

Understand the entity

2. Obtaining information to assess the risks of material misstatement in the financial statements.3. Determine the flow of documents and extent of controls4. Prepare comprehensive record for evaluation of the systems.5. Confirming on the system record and operation

Assess the risk of material misstatement

6. Assess the reliability and formulate a basis for testing

Select audit procedure to respond to risk of material misstatement

7. If controls are assessed ineffectively then auditors should go on to carry out full substantive procedures.8. Prepare and send a report to management identifying weakness and recommending improvement. 9. Auditor should carry out substantive procedure on material items

Review the financial statements

10. Determine whether the financial statements are consistent with auditor understanding.11. Report to member is the end product which auditors express their opinion of the accounts.12. Report to management is an additional end product of the audit for suggestions of improvements

The differences between External and Internal Auditors:

External InternalIndependence Appointed by shareholders Appointed by management

Responsibilities Fixed by law Set by managementReporting Member (shareholders and

other users)Management (directors)

Scope of work Express an opinion on truth and fairness of accounts

Consider whatever financial and operational areas

management determinesInternal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.

A risk-based approach is taken which involves identifying the risks which may prevent the organization from meeting its objectives.

Audit Committees’ responsibilities:

1. To monitor company’s financial statement and performance2. To review internal financial control3. To review internal control and risk management systems4. To monitor and review the effectiveness of internal audit5. To make recommendation on the appointment of external auditors6. To approve the remuneration and terms of engagement of external auditors

7. To review and monitor the independence and objectivity of the external auditors and the effectiveness of the audit process.

8. To develop and implement policy on the engagement of the external auditor to supply non-audit services.

9. To report to the board on any matter, improvement, and recommendations.

The law gives certain parties some remedies in the event of the auditors making a mistake, and remedies fall into 2 categories:

1. Key claimant is the company because auditors signed a contract with company

2. The third parties, the auditor can only liable to them, if the auditor is aware of the existence of them, and they were relying on auditor report

Statutory Duties

To report on the truth and fairness of financial

statementTo ensure that

director is consistent

To ensure company has kept adequate accounting record

To ensure the inclusion of

director responsibilities in

the financial

To ensure branches of company has given sufficient

information

To ensure the underlying records mate with the

financial statement

Main Duty

Company ShareholdersAuditorContract

ContractAuditors Company

Individual shareholders

Potential shareholders

The bank

Other lenders

Company Law to Directors

Directors are required by law to:

1. Select suitable accounting policy and apply it consistently

2. Make judgment and estimate reasonable and prudent

3. State in any material departure (change from standard) disclosed and explained in financial statements

4. Prepare financial statements on the going concern basis.

Directors’ Responsibilities

Keep proper accounting records

Ensure the financial statements comply with law

Safeguard the company’s assets

Prevent & Detect fraud and irregularities

Fraud

Intentional misstatementUnintentional misstatement

Fraudulent financial reporting

Misstatements resulting from misappropriation of

assets

Forgery

Deliberate failure record

Intentional misrepresentation

Collusion

Requirement to Auditors:

1. Professional skepticism2. Discussing among the engagement team3. Risk assessment procedure and related activities

Auditor should perform some of the following procedures:

1. Make inquiries to managementa. Management’s assessment of riskb. Management’s identifying and responding to riskc. Management’s communication to governances and employee

2. Question management if they aware of any actual, suspected or alleged fraud3. If there are internal auditors, external auditors should ask them if they aware of actual,

suspected, or alleged fraud, obtain their view about risk of fraud, and procedures performed4. Make enquiries to other operating personnel not involving in governance.5. Obtain an understanding of how those governance oversights the processes of identifying and

responding to fraud & internal control in place.6. Make inquiries to governance if they aware of the actual, suspected, or alleged fraud.7. Consider unusual or unexpected relationships8. Consider if other information obtained risks9. Evaluate the risk assessment procedures and related activities performed indicate risk of fraud.

Internal Auditors’ responsibilities for fraud:

1. Prevent fraud by assessing the adequacy and effectiveness of control systems2. Detect fraud by being mindful when carry out work3. Reporting any suspicions

Express term in the engagement letter would include:

1. Management’s responsibilities in preparing fair financial statement (IFRSs)2. Provide auditors with access to all documents3. Provide auditors with unrestricted access to persons within the entity.

Implied terms (3R) always exist in the contract:

1. Duty to exercise Reasonable care (means following)a. use general accept auditing techniquesb. investigate if any suspiciousc. act honestly and carefully when making judgment

2. Duty to carry out the work required with Reasonable expediency (方便)3. Right to Reasonable remuneration

Claiming against auditors need 3 things:

Company Third parties1. Duty of care : express in contract &

enforce by law2. Negligence: judge by the professional

standard by day3. Damages: client suffered some monetary

loss

1. Duty of care : without a contract but in case

2. Negligence: judge by the professional standard by day

3. Damages: client suffered some monetary loss

Eligible as an auditor:

1. Holding appropriate Qualification (individual), or firms controlled by qualified persons2. Fit (competence and capacity) and proper (character and suitability) persons3. Works is conducted Properly with professional integrity 4. Technical standards (eg. ISAs)5. Maintain an appropriate level of Competence (CPD)6. Prevent individual not holding appropriate Qualification, and not a member of the firm

The regulatory body should monitor and enforce compliance include provisions relating to:

1. Admission (加入) and expulsion (开除) of members2. Investigation of complaints against members3. Compulsory professional indemnity (损害赔偿) insurance

In each visit of the regulatory body to monitor the auditors should be as following: Proper structure of audit approach Carefully instituted quality control procedures Ethical guidelines Technical excellence Fit and proper criteria Peer review (audit files are review by another partner in audit firm)

o Hot review is carried out before report is signed by peer.o Cold review is carried out after report is signed by independence person

Appropriate fee

IFAC

National level

UK

ACCA ICAEW ICAS CIMA

France

Accountants Auditors

Gernany

ICPA

USA

AICPA

Ghana

ICA(Ghana)

Singapore

ICPAS

EU member states

RSBs

International Level

IAASB

The purpose of review is to ensure that:

- Audit work is in line- Sufficiently documented- Issues resolved and reflected in audit conclusion- Objectives were achieved- Conclusion support audit opinion and reflect finding of the audit

International Standard on Auditing (ISAs) contains:

- Basic principle- Essential procedures- Guidance of explanatory & other material

ISAs do not override the national regulation:

- If ISAs conform with local regulation, then it is automatically comply with ISAs- If ISAs differ from local regulation, as you are auditor should comply with ISAs but try to encourage

changes in local regulation.

ACCA Code of Ethic and Conduct:

- Integrity: straightforward and honest- Objectivity: unbiased, conflict of interest, undue influence of the others or business judgment.- Professional Competence and due care: maintain professional knowledge on current development in

practice, legislation, and techniques, act diligently or thoroughly and in accordance with standard.- Confidentiality: respect the confidentiality of information, not disclosed information to third parties.- Professional behaviors: comply with regulation and law, avoid act that discredits profession.

Threats to the independence as auditors: (SSAFI)

- Self-interest eg. Financial interest- Self-review eg. Review by the same person- Advocacy- Familiarity eg. long association, acceptance of gift - Intimidation eg. Dismissal

Other services of Audit firms:

1. Preparing account & financial statement2. Valuation services3. Taxation services4. Internal audit services5. Corporate finance services6. IT services7. Temporary staff cover8. Recruitment services

Accountants of Assurance client and Assurance firm are not allowed to:

Accountants Assurance Firms- Authorize on the transaction- Implement any recommendation- Reporting as management capacity

- Determines and change journal entry without approval

- Authorize transactions- Prepare source document

Information required should be disclosed except where:

- Consent has been obtained- Public duty- Legal or professional right or duty

Obligatory disclosure Voluntary disclosure- Treason- Terrorism or money laundering- Noncompliance with law and regulations

- Made by member- Protect member’s interest- Process of law- Public duty

Procedures before Acceptance audit work

professionally qualified

existing resources adequate

obtain references

communicate with present auditors or previous

auditors

procedure after accepting

nomination

ensure the removal or resignation of auditor was

properly conducted

ensure new auditor appointment is valid

submit a letter of engagement

Contrast low and high risk client

Client screening

1/ factor to consider (MERRA) are following:

1. Management integrity2. Engagement economic3. Risk4. Relationship 5. Ability to perform the work

2/ Approval

Audit Engagement Letter should content of:

1. Objective and scope of audit2. Auditors’ responsibilities3. Management’s responsibilities4. Finance reporting framework management adopted5. Form of any report to be issued by auditors6. Inherent limitation of an audit that some material misstatement may remain undiscovered7. The unrestricted access to all documents and persons within the entity

New Audit Engagement letter should include factors following:

1. Misunderstand in object and scope of audit2. Revise or special term of engagement3. Change of senior management4. Significant change in the nature or size in client business5. Legal requirements6. Change in the financial reporting framework

Low risk

good long term prospects

well-financed

strong internal controls

conservative, prudent accounting policies

competent, honest management

few unusual transactions

HIgh risk

poor recent or forecast performance

likely lack of finance

significant control /weaknesss

doubtfull accounting policies

lack of finance director

significant related party or unexplained transactions

Understanding Entity and its environment by MINIO

Understanding entity and its environment

Industry, regulatory and other external factor

Nature of the entity

Objectives and strategies and relating

business risks

Measurement and review of the

entity’s financial performance

Internal Control

FFIBFinancing

InvestmentsFinancial reportingBusiness operation

2EExistence of objectives relating toEffects of implementing strategies

Key ratio/operating statistics, key performance indicators, trend, forecasting, budgets,

variance, analyst reports and credit rating report,

competitor analysis, financial performance from period to

period

Entity’s policies, accounting system

MECC

- Control activities- Monitoring of

controls- The control

environment- Entity’s risk

assessment process

LMARLLevel of Economic Activities

MarketsAccounting policies

Regulatory frameworkLegislation

Analytical procedures consist of evaluations of financial information made by a study of plausible (貌似真实的) relationships among both financial and non-financial data, and encompass (包含) the investigation of identified

fluctuations and relationships that are inconsistent with other relevant information or deviate (脱离) significantly from predicted amounts.

Audit Risk (AR) = Inherent Risk (IR) x Control Risk (CR) x Detect Risk (DR)

Audit risk is the risk that auditors give an inappropriate opinion on the financial statementInherent risk is the susceptibility of an assertion to a misstatement and that could be material individually or when aggregated with other misstatements, assuming there were no related internal controls.Control risk is the risk that a misstatement that could occur in an assertion and that could be material individually or when aggregated with other misstatements, will not be prevented or detected and corrected on a timely basis by the entity’s internal control.Detect risk is the risk that the auditors’ procedures will not detect a misstatement that exists in an assertion that could be material, individually or when aggregated with other misstatement Business risk is the risk inherent to the company in its operations. It is risks at all levels of the business.Sampling risk arises from the possibility that the auditor’s conclusion based on a sample of a certain size that difference from the entire population.Non-sampling risk arises from factors that cause the auditor to reach an erroneous conclusion for any reason not related to the size of the sample.

Audit risk Business riskIs focus only financial statement and exists only relation to the opinion given by the auditors

Is risk which affect organization directly, arises from operations and present at all time

The factors indicate that a risk might be significant risks are:

- Risk of fraud- Relationship with recent developments- Degree of subjectivity in financial information- Unusual transaction

o Management interventiono Complex accounting principles or calculationo Manual interventiono Opportunity for control procedures not to be allowed

- Significant transaction with a related party- Complexity of the transaction

Risk of material misstatement

CompanyFinancial Statement

Auditors

Inherent risk + Control risk

Detection risk not find by auditor

Sampling risk is in the detection risk, when auditor

cannot detect risk in sampling

Auditors must formulate:

- Overall responseso Emphasizing to audit staff to maintain professional skepticismo Assigning additional or more experienced staff to the audit teamo Using expertso Providing more supervision o Incorporating more unpredictability into the audit procedures

- Detailed further audit procedure1. Tests of controls to obtain sufficient and appropriateness audit evidence

a. Reperformance and inspection are useful procedure2. Substantive procedures (on material items)

a. Analytical procedures i. Large volumes of predictable transactions

b. Other procedures (tests of detail) i. Class of transactions, account balance and disclosure

ii. Agreeing FS to the underlying accounting recordsiii. Examining material journal entriesiv. Examining other adjustments made in preparing the financial statementsv. Identifying the significant risks

Audit Risk If the auditors do not identify the

misstatement they could give an incorrect opinion on the financial statement

Detection RiskRisk that the

auditors do not detect the error in

the inventory

Financial statement RiskFinancial statements maybe

materially misstated

Inherent Risk

Control RiskThe internal controls may not detect the error in the

inventory figure

Business Risk

Directors set up controls to ensure inventory is valued

correctly

Risk that sales do not recover

Affects

Value of inventory

Impacts

Inventory maybe overstated

If it doesn’t improve going concern

question

Economic downturn

Sale price of product fall

Affects

Value of inventory

Auditors may carry out their audit work for one year in 2 or more sittings (interim audit & final audit)

Interim audits are audits undertaken prior to the final audit, often during the period under review and test of control is likely to be carried out at the interim audits.

Final audit is the main period of audit testing, when work is focused on the final financial statement

Auditors determine the where material misstatements are most likely to arise, and the nature, timing and extent of their testing as following:

- Obtain an understanding of the entity and its environment- Assess the risks of material misstatements - Respond to those risks

Auditors respond to assessed risk through audit strategy (general approach) and audit plan (detailed testing approach)

Audit evidence is all of the information used by the auditor in arriving at the conclusion on which the audit opinion is based, and include information contained in the accounting records underlying the financial statements and to the information.

Objective of auditor is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion. Sufficient measure quantity of audit evidence, Appropriateness measures quality or relevance and reliability of audit evidence. Audit evidence indicates what is probable (persuasive) rather than definite (conclusive)

Auditor just only give a reasonable assurance on the financial statement is free from misstatement for following reason:

- Auditor do not check very items because too time consuming - Limitation of accounting system and internal control (accounting record may not full of detail and

accounting system may be operated by person who do not full understand of system)- There is collusion which directors and staffs do not tell the true- Audit evidence just indicate a probable not a certain.- Auditor may need expert’s assistance.

Factors auditors consider to sufficient and appropriate evidence are:

- Risk assessment- Materiality- Past experience- Source & reliability of information

System based approach (Combined approach) is an approach to audit which seeks to place reliance on the accounting systems of an entity. (Test of control + substantive procedures)

Direct verification approach (Substantive approach) is an approach which does not place reliance on systems, where the auditor only verifies individual transactions and balances in the financial statements.

Balance sheet approach is common substantive approach focus on the statement of financial position

Test of controls are test about 2 aspects of accounting system & internal controls

1. Design : capable of preventing and detecting material misstatement2. Operate : operation’s effectiveness of system

Substantive procedures are tests to detect material misstatement:

1. Analytical procedures2. Other procedures (classes, a/c balances, & disclosures)

Financial statement assertions based on the assets, liabilities and transactions of client, and the event that affect client’s account.

Assertions (ACCA-VOCER)Classes of transaction and events for the period under audit

Account balance at the period end

Presentation & disclosure

Occurrence Existence OccurrenceCompleteness Right & obligations CompletenessAccuracy Completeness ClassificationCut-off Valuation & Allocation Accuracy & valuation ACCA-VOCER Accuracy, Completeness, Classification, Allocation, Valuation, Occurrence, Cut-off, Existence, and Right & obligations.

Management’s experts Audit’s expertsWhose field is used by the entity to assist the entity in preparing the financial statements

Whose works is used by auditors to assist the auditor in obtaining sufficient appropriate audit evidence

Reliability of evidenceWODCE

External sourcesControl system operated effectivelyDirectly by auditorsWritten documents & representationsOriginal documents

Inspection of assets

Inspection of documentation

Observation

Inquiry

External confirmation

RecalculationReperformance

Analytical procedures

Materiality should be calculated at the planning stage of the audit and based on experience and judgment, and should be reviewed during the audit. Materiality provides a threshold or cut-off point rather than being a primary qualitative characteristic.

Performance materiality means the amount set by the auditors at less than materiality for the financial statements as whole to reduce risk to low level.

Certain types of error should be investigated even if they are small in monetary terms but they are important for the other reasons:

- Recurring errors indicate weakness in the accounting system- Errors mean breach the statutory requirements- Critical point errors (loss in profit)- Conceptual errors (breach accounting system)

Calculation of planning materiality guideline:Revenue: 0.5 – 1 %Gross profit: 0.5 – 1%Profit before tax: 5 – 10% Net assets: 2 – 5%Total assets: 1 – 2%

Audit strategy Audit planSets the scope, timing, direction, and guide development to detailed audit plan

Convert audit strategy into detail plan include nature, timing and extent of audit procedures to reduce risk to accepted low level.

Establishment of audit strategy:- Characteristics of engagement

o Frameworko Industryo Location of components

- Objective of engagemento Deadlineo Expected communication date with

governance- Engagement team’s efforts

o Materiality levelso High risk areaso Material components & a/c balanceo Reporting/industry specific

development- Results of preliminary engagement

o Auditors’ independenceo Management integrity issues

- Ascertain the nature, timing, and extent of resources to perform engagement

o Resources requiredo When and where the resources will be

deployed & how they are managed, directed, and supervised.

Objective of planning:Appropriate attention is devoted to difference

areas of auditPotential problems are identifiedWork is completed effectively and efficientlyTasks are proper assigned.

Structured approach to planning stages:- Updating knowledge of client & assessing risks- Preparing the detailed audit approach

Making administrative decision such as staffing & budgets.

engagement partner

(reporting partner

Audit Manager

Supervisor/audit seniors

Audit assistant

Engagement partner is to ensure that audit staffs:

- Are carried out level of professional skepticism.- Proper communication for both audit team and

audited entity

Audit Strategy

Nature

Timing

Direction

Guides

Audit plan Convert

Scope

Extend

Audit procedures to performance to obtain

Sufficient and appropriate

audit evidence

Acceptable low level audit risk

To reduce

Expert’s engagement in the auditing as following:

- Provide specialist advice to client on particular matter- Help auditors to obtain sufficient appropriate audit evidence

The needs of using expert’s work are:

1. Valuation of certain type of assets2. Actuarial calculation of liabilities associated with insurance contracts or employee benefit plan,

environment liabilities, clean-up costs, contracts, laws and regulations3. Analysis of Complex or unusual tax compliance issues

Assessment the professional of the expert may as following:

1. Personal experience2. Discussion with that expert3. Discussion with other auditors expert familiar with4. Knowledge of qualifications, membership of professional body or industry association, license to

practice, or other form of external recognition5. Published papers or book written by that expert6. Expert ‘s firm’s quality control policies and procedure

Expert’s term of reference may cover by following:

- The nature, scope and objectives of that expert’s work- The roles and responsibilities of auditor and expert- The nature, timing and extent of communication between auditors and expert- The need of observing confidential requirement

Assessment of expert’s finding compare to financial statement assertion

- The source of data- Assumption and method used- When work is carried out- The reason for any changes in assumption and method- The result of work in the knowledge of business and other procedures.

ISA states that “while the objectives of the internal audit function and the external auditor are different, some of the ways in which the internal audit function and the external auditor achieve their respective objectives maybe similar.”

Internal auditor operates in one or more of the following area:

1. Review the accounting and internal control system2. Examine the financial & operational information3. Review of economy, effectiveness, and efficiency4. Review of compliance with laws and regulations5. Special investigations

Determining adequacy of internal auditors’ work:

1. The objectivity – to whom report2. Technical competence – technical training3. Professional due care – properly planned, supervised, reviewed and documented

4. Effective communication between internal and external auditor

Computer control and auditing:

1. Auditing around computer: A sample of inputs will be checked to outputs, and vice versa. If they prove to be accurate then assumed that system of control is effective and operate properly.

2. Auditing through computer: examine the detail processing routine of control in the system if adequate, and this should use Computer Assisted Audit Technique (CAAT)

3. Auditing with computer: using CAAT (audit software + tests data)

Audit software:

1. Interrogation software – access client data2. Comparison programs – compare program’s version3. Interactive software – online system’s information4. Resident code software – stay permanently in client system

Test data:

1. Data processing valid transaction – produce required documentation and update a/c record2. Data processing invalid for any reason

Sampling

Sample sizes for test of control Sample sizes for substantive procedureTolerable misstatement rate Tolerable misstatement rateExpected misstatement rate Expected misstatement rate

Population value & stratificationMisstatement means either control deviations, when performing tests of controls, or misstatements, when performing tests of details.Expected misstatement – the auditor expects to be present in the population.Tolerable misstatement – maximum misstatement in the population auditor would be willing to accept.Anomalous misstatement – arises from an isolated event that has not recurred other than on specifically identifiable occasions and is therefore not representative of misstatements in the population.

There are 2 types of sampling, statistically based (use techniques from which mathematically constructed conclusions) Non statistical method (auditor draw judgmental opinion about population)

Statistical sampling has the following characteristic

1. Random selection2. Use of probability theory

Population is entire set of data, sample is selected, and auditor uses to draw conclusion.

Sampling units are individual items.

The auditors are faced sampling risk in:

a. Test of control, controls are more effective than they actually are or test of details that a material error does not exist when in fact it does – this is risk of Audit effectiveness.

b. Controls are less effective than they actually are or test of details that a material error exists when it does not – this is risk of Audit efficiency.

Statistical samplingAdvantages Disadvantages

- Definite level of confidence at the conclusion of auditors’ test

- Sample size is objectively determined- Clarify their audit objectives- Results of tests can be expressed in

mathematical term- Bias is eliminated

- The technique may be applied blindly- Unsuspected patterns or bias in sample

selection may invalidate the conclusion- Need frequently back-up- At the conclusion of statistical sampling based

test the auditors may fail to appreciate the further action necessary based on the results obtained.

- May be applied carelessly- Time consuming on selection- The degree of tolerance of acceptable error

must be predetermined

Audit sampling- less than 100%

& each units have a chance

of selection

Random selectionuses random number tables or computerised generator to select the sample

systematic selectionconstant inteval between selections, the first interval have random start

haphazard selectionauditor select items randomly by himself

sequence or block selection used to check whether certain items have particular characteristics

The reasons why auditors use working paper to record their works are:

a. Reporting partner needs make sure that work delegated by him has been properly performed.b. They provide as reference for audit problems encountered. c. They are invaluable in the event of litigation against them by either the client or some third party.d. They are not only assisting in the control of current audit but well for planning and control of

future audit.e. Preparation of working papers encourages the auditors to adopt a methodical approach, which to

improve the quality of that work.

The auditor must prepare audit documentation that is sufficient to enable an experienced auditor to understand:

1. The Nature, timing and extent of the audit procedures performed to comply with the ISAs and applicable legal and regulatory requirements.

2. The results of the audit procedures performed, and the audit evidence obtained; 3. Significant matters arising during the audit and significant professional judgments made in reaching

those conclusion.

Working papers

Audit planning & procedures

Audit evidence

Supervision and review

Are prepared by and for, or obtained and retained by, the auditor in

connection with performance of the audit. It in the form of data stored on paper, film, electronic media or other

media

Nature of procedure to be performedSize and complexity of the entity

The identified risks of material misstatementsJudgment on the work and evaluating results

The significance of the audit evidence obtainedThe nature and extent of exception identified

Affect to the form and content

Working paper

Working paper headed with Content of the working paper1. Name of client2. Balance sheet date3. The file reference4. Prepare person name and date5. Subject6. Name of reviewing and date

1. Objective2. Sources of information3. How sample was selected and the size4. The work done5. A key to any ticks or symbols6. Appropriate cross referencing7. The results obtained8. Analysis of errors9. Conclusions drawn10. Key points highlighted

Automated working paper packages can make the documenting of audit work much easier by automatically cross reference and balanced by the computer.

The advantages of automated working papers are as follows:

1. Reduce the error risk2. It will be neater and easier to review3. Save time, computer will summarize the key analytical information4. Standard form can be called up on the screen5. Audit working paper can be transmitted electronically.

Control Environment

communication and

enforcement of integrity and ethical value

commitment to competence

participation by those charged

with governance

management's philosophy and operating style

organizational structure

assigment of authority and responsibility

Human resource

policies and practices

Document a conclusion not readily from work perform or audit evidence obtainedThe audit methodology and tools used

Current audit files: contain information of relevance to current year’s audit.

Permanent audit files: contain information of continuing importance to audit.

Setting up internal control in accounting system to assess the following:

1. Transactions are properly authorization2. They promptly recorded at the correct amount, correct account, and proper accounting period.3. Access to assets is proper authorized4. Recorded assets are compared with the existing assets.

Control activities

approval & control of documents

control over computerised applications

checking the arithmetical accuracy of

records

maintaining and reviewing control accounts and trial

balances

reconciliations

comparing the results of cash,

security and inventory counts with accounting

records

comparing internal data with external

sources of information

limiting physical access to assets

and reords