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– Obtain a bank confirmation letter from the bank for all of its bank accounts and agree all accounts listed on the letter to X’s bank reconciliations/trial balance….to ensure completeness of bank balances.
^This is for completeness
– Agree the bank balance per the bank reconciliation to the year end bank confirmation letter/bank statements…
Is this the reverse of completeness so is it occurrence?
Please could I get some clarity around:
What is the assertion for the second procedure and
Do we always have to state the assertions/what if i get the assertion wrong but the procedure right?thank you!
That is a fundamental question you are asking there – please see the bottom of the 2nd page of Chapter 16 in the notes:
? Note that completeness, accuracy, classification and presentation are relevant to BOTH
‘transactions and events’ and ‘account balances’ and their related disclosures.
? Understand that OCCURENCE and CUT-OFF relate only to transactions and events.
? Understand that existence, rights and obligations and valuation and allocation relate only to
account balances.So “Agree the bank BALANCE per the bank reconciliation to the year end bank confirmation letter/bank statements” cannot be occurrence because you’re not looking at a class of transaction.
Agreeing the monetary amount of a balance is “accuracy, valuation (and allocation)”.
Also if you look in an examiner’s report, preferably for an exam you have attempted https://www.accaglobal.com/uk/en/student/exam-support-resources/fundamentals-exams-study-resources/f8/examiners-reports1.html you may find additional pointers.
If procedure is only 1/2 right, because the assertion is wrong, you’ll get 1/2 a mark.
thank you, so the assertion tested must always be explicity stated for each procedure? There have been a few past papers where the answers dont do so so just want to check if its always required?
For example, if the procedure is to review the draft financial statement and confirm the provision has been recorded in line with IFRS.
Does that need to be developed further to confirm the assertion? This answer is what was also taught in the revision lectures by opentuition.
There is guidance in the examiner’s report:
“In some cases, question requirements can sometimes focus on a specific assertion such as valuation or completeness or on a particular element of an account balance, such as just additions, and where this is the case, care must be taken to ensure that any substantive procedures listed only relate to this assertion or account element.”So if specific assertion stated, it would be superfluous to include in the procedures.
If you look at any published answers you will see that sometimes assertions are stated but sometimes not – but if not, there should be some “elaboration” on why the procedure is performed e.g.
“Review monthly purchases and other expenses to identify any significant fluctuations and discuss with management.”
Not just “Review monthly purchases and other expenses”
thank you so much Kim I really appreciate the detail you provide this is really helpful and reassuring, thanks again!
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