FA Exercise 3.2-A

Salaries & wages expense has been incurred during the period in respect of the personnel employed by the entity. Salaries and wages expense does not include the payroll cost of any unauthorized personnel.

• Occurrence

• Completeness

• Accuracy

• Cut-Off

Salaries and wages cost in respect of all personnel have been fully accounted for.

• Completeness

• Accuracy

• Cut-off

• Classification

Salaries and wages cost has been calculated accurately. Any adjustments such as tax deduction at source have been correctly reconciled and accounted for.

• Accuracy

• Cut-off

• Classification

• Existence

Salaries and wages cost recognized during the period relates to the current accounting period. Any accrued and prepaid expenses have been accounted for correctly in the financial statements

• Cut-off

• Classification

• Existence

• Completeness

Salaries and wages cost has been fairly allocated between:
-Operating expenses incurred in production activities;
-General and administrative expenses; and
-Cost of personnel relating to any self-constructed assets other than inventory.

• Classification

• Obligations

• Completeness

• Rights

Inventory recognized in the balance sheet exists at the period end.

• Existence

• Completeness

• Rights

• Valuation

All inventory units that should have been recorded have been recognized in the financial statements. Any inventory held by a third party on behalf of the audit entity has been included in the inventory balance.

• Completeness

• Rights

• Valuation

• Occurrence

Audit entity owns or controls the inventory recognized in the financial statements. Any inventory held by the audit entity on account of another entity has not been recognized as part of inventory of the audit entity.

• Completeness

• Rights

• Valuation

• Obligations

Inventory has been recognized at the lower of cost and net realizable value in accordance with GAM. Any costs that could not be reasonably allocated to the cost of production and any abnormal wastage has been excluded from the cost of inventory. An acceptable valuation basis has been used to value inventory cost at the period end

• Valuation

• Occurrence

• Completeness

• Accuracy

Transactions with related parties disclosed in the notes of financial statements have occurred during the period and relate to the audit entity.

• Occurrence

• Completeness

• Accuracy

• Valuation