Assertions about classes of transactions and events for the period under audit (Statement of Profit and Loss

Accounts):

Occurrence

Completeness

Accuracy

Cutoff

Classification

Assertions about account balances at the period-end (balance sheet accounts):

Existence
Rights and obligations

Completeness

Valuation and allocation

Assertions about presentation and disclosure:

Occurrence and rights and obligations

Completeness

Classification and understandability

Accuracy and valuation

SUMMARY OF THE FIVE-STEP PR

#
1

2
3

5
ns and events for the period under audit (Statement of Profit and Loss Accounts):

Transactions and events that have been recorded have occurred and pertain
to the entity.

All transactions and events that should have been recorded have been
recorded.

Amounts and other data relating to recorded transactions and events have
been recorded appropriately.

Transactions and events have been recorded in the correct accounting

period.

Transactions and events have been recorded in the proper accounts.

the period-end (balance sheet accounts):

Assets, liabilities, and equity interests exist.
The entity holds or controls the rights to assets, and liabilities are the
obligations of the entity.

All assets, liabilities, and equity interests that should have been recorded
have been recorded.

Assets, liabilities, and equity interests are included in the financial

statements at appropriate amounts and any resulting valuation or allocation
adjustments are appropriately recorded.

sclosure:
Disclosed events, transactions, and other matters have occurred and pertain
to the entity.

All disclosures that should have been included in the financial statements
have been included.

Financial information is appropriately presented and described, and

disclosures are clearly expressed.

Financial and other information are disclosed fairly and at appropriate

amounts.

SUMMARY OF THE FIVE-STEP PROCESS

Procedure
Review checklist

Document controls
Evaluate design

Corroborate implementation

Test operating effectiveness *

FIVE-STEP PROCESS
Description Worksheet
Review, scan, and consider the listing of prepopulated controls.
Risk Control Mapping &
Complete documentation and write up controls specifically within Matrix "RCM"
your organization.
Consider whether the controls in place are designed properly.
Verify that key controls (which are properly designed) exist; Test of Design "TOD"
consider supporting documentation.
Sample test key controls to determine whether they are functioning
Test of Effectiveness "TOE"
effectively as designed.
ABCD Continuous Auditing/Continuous MonitoringCA CM Control CatalogsFor Internal Use Only

Client Name <<Name>>

Process Inventory and Other Expenditure[Procurement to Pay]
Period of coverage: <<period>>
Tester: <<Name>>
Reviewer: <<Name>>
Date of Testing: <<Date>>

Description. Assertions affected. Risk Control Matrix (RCM) Test of Design, Implementation & Conclusion. Testing of Operating Effectiveness.

Valuation and Allocation

Rights and Obligations

Completeness

Occurrence
Is IPE Used in

Existence

Accuracy
Possible Controls that Addresses Risk of Material Misstatement - Importance of
Account Balance / Class of Risk Description - "R" Actual Controls that Addresses Risk of Sub-Process Testing or If IPE is used, List Control Design Conclusion on Testing Reference —

Cut off
Control "C" Type of Control Assessed Risk Is Control Design Gap Walk through Substantive
Ref # Sub-Process Transactions /Disclosure "What can go wrong" "How to Mitigate?" Material Misstatement - "C" Owner (H,M,L) Automated ? Fraud Risk? Frequency Performing a IPE's. Effeciency (Descriptive) Design Implemented Reference Procedures Planned operating Substantive
affected "How to Mitigate?" Relevant effectiveness Procedures
Control?

P-1 Vendor Selection NA x x x x x x [R1] Selected vendors do not meet company's requirements (quality, [C1.] An approved supplier list is created and put in place and Preventive
prices, availability). communicated to help ensure that goods and services are obtained
only from properly authorized suppliers. In case goods/ services are
procured/ rendered from/by vendors other than the approved
vendor list, approvals are obtained from the management, along with
the reasons for receiving them from other than approved vendors M M
and the same is documented, or such purchases/services are tracked
in an exception report which are reviewed and followed up on a
timely basis.

[C2.] In case of one time vendors- a general code is appointed, and all Preventive
transactions through this code are regularly reviewed. M M
P-1 Vendor Selection NA x x x x x x [R2] Agreements do not provide best price-performance ratio. [C3.] Quotations are obtained for all purchases/services and are Preventive
(i) The vendor selected is not after obtaining quotations. documented and maintained by appropriate personnel for further M M
(ii) The vendor providing the lowest quote is not selected. reference.
(iii) The rate of purchase is not as per the approved price list.
[C4.] The price list is created and put in place within the system,
which is regularly updated for changes. On entry of the preliminary
details of purchase, such as item code/item number the prices are
automatically picked up (in case the rate is different from the price
list, the reasons for the differences are documented and approved by
the management. Proof of such approval are retained).

[C5.] Acceptance of vendors that did not submit the lowest bid are Preventive
adequately justified, documented and approved by appropriate H M
personnel before a purchase order is placed.
P-2 Vendor Master Trade Payables a x x x x x [R3] The trade payables balance includes amounts due to [C6.] New vendors to be added to the vendor master file are
Data unauthorised vendors. submitted to the accounting function by purchasing personnel. New
vendors are independently verified by the accounting function for
appropriateness and approved by management before the vendor is
added to the vendor master file.

P-2 Vendor Master Trade Payables x x a a a x [R4] Vendor master data may be inappropriately modified, resulting [C7.] Changes to vendor master file are restricted to a few and a
Data in inappropriate or inaccurate vendor master data and/or payments report is generated and reviewed on a periodic and consistent basis
made to vendors. for the modifications made, by whom they were made, and subject to
whose approval they were made AND/OR
[C8.] Inventory/Trade payables and other expenses are recorded
automatically by the ERP system upon matching the purchase order,
Goods Receipt Note (GRN)/ completed service order, and the invoice
received, completing a 3-way match.

P-2 Vendor Master Trade Payables a x x x a a [R5] No segregation of duties as regards maintaining & updating the [C9.] Access controls enforce segregation between maintaining
Data vendor master & making payments to vendors. vendor master file data and making payments to vendors.
P-3 Purchase Orders 1. Cost of Sales x x a x a a [R6] Authority to raise purchase requisitions and purchase orders [C10.] A purchase requisition authorization list is maintained, Preventive
2. Trade Payables are not restricted & there is no segregation of duties as regards specifying the amounts up to which individuals are authorized to
raising the requisition and approving such requisitions. approve purchase requisitions. These requisitions raised provide
necessary information such as reasons for the requisition, period
within which they are required, budget allocated, utilised and
available balance. (in case of overutilization of budget, reasons for the
same are also to be documented and in case the materials are already H C
available in stock, reasons for raising a requisition when already
available is also documented)

[C11.] There is a specific order processing department who has the Preventive/
authority to raise the purchase order in the system, after obtaining Detective
approval for the purchase requisition raised. The Purchase Orders
raised are also subject to approval as per the authority matrix in L C
place.

[C12.] Segregation is enforced by system access controls between Preventive

raising requisitions, approving requisitions raised, raising purchase H A
orders, approving purchase orders.
P-3 Purchase Orders 1. Cost of Sales x x a x a x [R7] Purchase orders are incomplete/ inaccurate/ unauthorized. [C13.] Purchase orders are created and approved for all purchases of
Amendment to a Purchase Order is not duly approved by the initial goods and services.
approvers. The authority matrix in place prescribes the personnel along with the
There is no segregation of duties as regards raising the purchase limits upto which they can approve purchase orders raised (generally
order and approving such orders. coincide with the approval matrix for approving payments). This H C
authority matrix is configured within the system.

2. Trade Payables
x x a x a x [C14.] The purchase orders raised are reviewed on a quarterly basis
to ensure that the details updated in the system against each of the
purchase orders is as per the finally agreed upon terms with the
vendor.(since the PO is linked to the accounting of the goods or H C
services received).

[C15.]Amended orders are subject to the same authorization controls

as original orders H C
[C12.] Segregation is enforced by system access controls between
raising requisitions, approving requisitions raised, raising purchase H A
orders, approving purchase orders.
P-3 Purchase Orders 1. Cost of Sales x x a x a x [R8.] Duplicate purchase orders are raised for the same requisition, [C16.] System has an inbuilt mechanism for ensuring one-to-one
resulting in the purchase of goods that are not needed. relationship between requisitions and purchase orders preventing H C
duplicate purchase orders from being generated.
P-4 Bill of Materials 1. Inventory. x x x a a x [R9.] Inappropriate BOM's are used for product costing. [C17.] BOM's validity dated are observed/enforced by the system
(BOM) and appropriate BOM status settings have been configured in the
system and further all BOM's are linked to work orders.

2. Cost of Sales. x x x a a x [C18.] User access to BOM is restricted to authourised persons

only.User access to BOM data is reviewed periodically.

©2008 KPMG International. KPMG International is a Swiss cooperative that performs no client services. Services are provided by member firms. All rights reserved.
 Walkthrough Documentation

Business Cycle
Sub-Process
Related Account Balances
Date(s) of walkthrough
Tester
Reviewer

Controls included in this walkthrough (Include control activity number ) including documentation of
narratives
Description of the procedures to understand the process:

Description of specific transaction selected to trace from initiation to recording.

Samples Selected

Purpose of the Control and its correlation to the risk/assertion

Nature and significance of the Risk
Competence and authority of the person(s) performing the control
Frequency and consistency with which the control is performed
Information Produced by the Entity (IPE)

Conclusion regarding control design

Conclusion regarding control implementation

Are there any significant processes not included or inadequately documented by the client? If so,
describe.
What were the points in the process at which a misstatement, including a misstatement due to fraud,
could arise
How are that,potential
these individually or addressed
errors in combination
by thewith otherinmisstatements,
controls place? would be material?
Are there any circumstances where the control(s) included in this walkthrough are/have been overridden
or bypassed? What are those circumstances?
kthrough Documentation

Inventory and Other Expenditure[Procurement to Pay]

PC-1,PC-2,PC-3,PC-4,PC-5,PC-6,PC-12,PC-13,PC-14,PC-15,PC-16,PC-17,PC-18,PC-19,PC-20,PC-22

1. Purchase Transaction.
2. Service Availed.
2 no's each.

Refer "RCM"
Refer "RCM"

1. Vendor Registration Forms.

2. Purchase request Form.
3. Vendor Evaluation (Comparative Analysis)
4. Payment Requests.
5. Competitive Quoatations.
6. Purchase Orders.

Refer "RCM"
Refer "Controls" along with "RCM"
 Client Name
Area
Period of coverage:
Tester:
Reviewer:
Date(s) of walkthrough

Activities
Initiates Trainer Requisitions
Approves Trainer Requisitions
Selects & Maintains Vendor Master database
Procure

Prepare MSA/WO/PO
Approves MSA/WO/PO
Modifies Vendor Master data
Approves Vendor Invoices for Payment
Prepares Payment Requests
Prepares GRN/GRIR
Prepares Voucher for payment (Matches P0-PR-invoice-GRN)
Ensure Tax complainces
Approves Cheques for Payment and affixes signature
Despatches Vendor cheques
Payment

Initiates Wire Transfers

Reviews Wire Transfers
Approves Wire Transfers
Posts Disbursements to Subsidiary ledger
Reconciles Disbursements from Subdiary ledger to G/L
Review of all the Documents before payment process
Responsible for modifying (adding, deleting, mapping ) G/L accounts
Approves changes to G/L accounts
Accounting

Prepares journal entries for posting

Approves journal entries
Posts journal entries
Employee Name Designation