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For each of the controls given below, select the type of control activity described:
The internal audit department agrees the physical assets to the asset register to ensure completeness.
Physical or logical control, Verification, ReconciliationVariances between actual and budgeted expenditure are analysed in the quarterly management accounts.
Segregation of duties, Verification, ReconciliationThe non-current asset register is password protected.
Physical or logical control, Segregation of duties, AuthorisationMy answer: Verification, Reconciliation, Physical or logical control
Correct answer: Reconciliation, Verification, Physical or logical controlI don’t understand as to why for the first answer, are we not verifying existence??
And what are we verifying for the second control?
Please let me know! Thanks in advance!This is a questions about types of control activities – see page 72 in our notes here https://opentuition.com/acca/aa/acca-audit-assurance-aa-notes
“Physical to book” is a test for completeness of recording
“Book to physical” is the test for existenceWe generally talk about assertions in the context of risks of misstatement and substantive procedures – controls don’t have to be aimed at assertions. For example “timely recording” is a control objective – but you don’t see “timeliness” as an assertion.
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