Response on assertion level Tut

Which assertion/s is triggered by the indicator?

• Accuracy, Valuation and allocation?

• Classification and Presentation

• Existence

• Completeness

Select the correct formulation for the following indicator:

"Raw material is sourced both locally and in Germany with the German account being settled in euros"

• Raw materials purchased in Euros might not be properly translated at the correct spot rate, which could result in errors (AVA).

• All qualifying costs for the purchase (importation) of raw materials might not be included or treated correctly (AVA).

• Raw materials are imported from Germany and the exchange rates used to translate the Inventory might be calculated incorrectly (AVA).

• Raw materials are imported from Germany and the complex accounting in IAS 21 can be applied incorrectly (AVA).

Complete the risk:

Inventory purchased free on board and still at sea at year-end might not be included in the financial records _________.

True or false:

Standard costing is a management accounting concept not recognized by IFRS

• True

• False

Select the correct assertion.

Variances between the standard costs and the actual costs might not be treated correctly.

• Accuracy

• Classification

• Existence

• Accuracy, Valuation and allocation

Select the correct risk given the following indicator:

"Dikoloi follows a standard costing method in order to account for the allocation of costs to its financial goods."

• The incorrect price not in accordance with standard costing might be used to account for Finished goods(Allocation)

• Standard costing might be incorrectly applied to the Inventory account. (accuracy)

• Overheads and labour costs arising from standard costing might not be appropriately accounted to the inventory account (AVA).

• The standard costing method is used in valuing the cost of inventories sold and thus increases the inherent risk of inventories being valued incorrectly (AVA).

When Inventory is purchased, which business cycle is affected?

• Revenue and receipts

• Inventory and production

• Purchase and Payments

• Human resources

Given the Good internal controls and the large number of transactions what audit approach will be followed for Inventory?

• Substantive approach

• Systems based approach

• Combined approach

Select the correct formulation?

• Interest on the loan might be capitalised to the loan instead of being expensed (AVA).

• Interest might be incorrectly calculated as the interest is payable bi-annually (Accuracy).

• The long-term and short-term portion may be incorrectly classified (Classification)

True or False?

The investment and finance cycle will implement many controls to mitigate risks in relation to loans that the company enters into?

• True

• False