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Entity name:
Susumi Philippine
Logistics, Inc.
Reporting period:
March 31,
2015
Nature:
Routine
Owner:
Background
We obtain an understanding of the significant classes of transactions (SCOTs) and significant disclosure
processes to identify and understand the risks of material misstatement at the assertion level (and, when
applicable, to identify and understand what can go wrongs (WCGWs)).
Attach this template to the related significant class of transactions/process within GAMx-SA in the
Understand significant classes of transactions and significant disclosure processes and perform
walkthroughs screen.
When we test controls for one or two routine SCOTs, we use the template NCE Understand routine
SCOTs, perform walkthroughs and test controls.
Initiation: the point where the transaction first enters the entitys process and is prepared and
submitted for recording
Recording: the point where the transaction is first recorded in the books and records of the entity
Processing: any changes, manipulation or transfers of the data in the books and records of the
entity
Reporting: the point where the transaction is reported (i.e., posted) in the general ledger.
Document our understanding of how incorrectly processed information is detected and corrected on a
timely basis.
To help ensure that we properly consider the effects of computer processing in making our risk
assessments and developing our audit strategy, describe automated aspects of the critical path of the
SCOT/significant disclosure process, including manual aspects that depend upon computer functionality or
computer generated data. Document the attributes of the related IT applications in the Audit planning
template, section 3.3, or equivalent documentation.
As part of our understanding of the critical path of the SCOTs, we obtain and document our high-level
understanding of relevant controls for the following, when not affected by significant risks:
Related party relationships and transactions, when we identify a related party SCOT (refer to NCE
10-4.2)
For significant risks, we identify controls relevant to the audit (refer to NCE 10-7) and document these in
the APT.
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Background
We obtain an understanding of the significant classes of transactions (SCOTs) and significant disclosure
processes to identify and understand the risks of material misstatement at the assertion level (and, when
applicable, to identify and understand what can go wrongs (WCGWs)).
Attach this template to the related significant class of transactions/process within GAMx-SA in the
Understand significant classes of transactions and significant disclosure processes and perform
walkthroughs screen.
When we test controls for one or two routine SCOTs, we use the template NCE Understand routine
SCOTs, perform walkthroughs and test controls.
Performed by
NA
SAP Business
One Version
8.82
SAP Business
One Version
8.82
NA
Recording of Amortization
SAP Business
One Version
8.82
SAP Business
One Version
8.82
Restatement of Cash
NA
SAP Business
One Version
8.82
Intercompany Reconciliation
NA
Accounting Assistant
NA
Provide any other details that are necessary to understand the initiation, recording, processing and reporting of
the transactions, including major input and output sources, if not included in the descriptions above. Refer to
NCE 17-EST-Documentation for the required documentation of our understanding of estimation SCOTs,
including relevant controls.
The non routine and estimation transactions of the Company are the following:
1. Computation of depreciation expense
2. Provision for impairment losses on receivables
3. Estimation of accruals
4. Computation of amortization of prepayments
5. Computation of Foreign Currency Gain/Loss
6. Intercompany Reconciliation
7. Preparation of Tax Returns
1.Computation of Depreciation Expense
Depreciation Policy:
The Company is using straight line depreciation
EYG 560NCE (July 2013)
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The Assistant Accounting Manager is the one who prepares the lapsing schedule of property
and equipment.
The lapsing schedule contains the dates the property and equipment were available for use,
costs, estimated useful lives, accumulated depreciation, and net book values.
The Company performs physical fixed asset count at the end of the fiscal year.
The Company also has fully depreciated assets which are still being used. Most of these are
office equipment such as office chairs and desks, filing cabinets, shelves, etc.
2.Provisions for impairment losses on receivables
The Acctg. Assistant maintains an aging analysis of receivables and provides an allowance on
overdue accounts. The aging analysis is system generated performed every month which
contains the date sale was made into which customer, invoice details, and aging of the
receivable. The receivables are specifically being monitored by the Acctg. Assistant. The
Company normally gives a term of 30 days to its customers. Those receivables which are
outstanding for more than 120 days are considered impaired and the Company provides an
allowance for such receivables. Journal entry for the provision is entered into SAP by the
Acctg. Assistant.
3.Estimation of accruals
Accruals are computed for Telephone and Landline Expense, Parking and Toll Fees, Cellular
Phones Expenses, Professional Fees, Securities Expense, 13th Month Pay and Retirement
Benefit Expense. Except for the last two accounts, the basis of accruals is the prior month
billing (B07.Control 3). Amount to be accrued for 13th month pay is determined by the
Assistant Accounting Manager depending on the current payroll salary of employees. While
amount accrued for retirement benefit expense was based on projected amount on the latest
actuarial valuation report. Expenses are classified into respective cost centers in which they
originate. The journal entries to record the accruals other than 13th month pay and retirement
benefit expense is prepared and posted in SAP by the Accounting Staff (B07.Control 4). While
Assistant Accounting Manager prepares and records the accrual for the remaining two
accounts (B07.Control 4). Accruals made are reversed on the subsequent month upon
payment. Journal entries to record the reversal and the subsequent payment are made by the
Accounting Staff in charge of payables. For the expenses where billings are made every 15th
of the month, they are pro-rated based on the no. eing of days used during March and April
only to comply with proper cut off and for proper recognition of expenses on proper
accounting period. Hardcopy of journal entry was no longer printed and review of the
immediate supervisor was no longer performed. The pro-forma entry to record accruals and
its subsequent reversals are as follows:
Internet - Operations
Professional Fee Accounting & Admin
Machinery Maintenance Operations
Staff Benefits
Accruals Others
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Subsequent Reversal:
Accruals Others
Cash or any other appropriate payable account
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4.Computation of amortization
The Assistant Accounting Manager prepares the monthly amortization table (B07.Control 5).
Amortization table includes the type of asset purchased, its cost, estimated useful life or
period coverage, and unexpired and expired portion of the prepayment. Previous periods
EYG 560NCE (July 2013)
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Since the Company is using voucher system, they record prepayments upon
preparation of Accounts Payable Vouchers. This will then be reversed upon preparation
of Check Voucher. The entry will be:
Accounts Payable Others
CIB - BPI Php (or any other Bank Account)
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Walkthrough
Describe the walkthrough procedures performed, addressing the points at which the transactions are
initiated, recorded, processed, and ultimately reported in the general ledger (or serve as the basis for
disclosures), including both the manual and automated steps of the process. For significant disclosure
processes, describe the procedures performed to confirm our understanding of the process and sources of
information management uses to generate significant disclosures. Use original source documentation and
information technology that the client personnel typically would use in the flow of transactions.
For controls over significant risks: Describe the walkthrough procedures to confirm our understanding of
the design of the controls and that they have been implemented. As we walk through the prescribed
procedures and controls, we should ask personnel to describe their understanding of the control activities
and demonstrate how they are performed.
We may perform our walkthrough in conjunction with the tests of transactions included in our substantive
procedures.
A) Walkthrough procedures
We select the following transactions for walkthrough:
Date:
SPLI_Lapsing
Schedule_3.31.2015.xlsx
B. Amortization
We obtained the screenshot of the journal entry for the amortization of Leasehold
Improvements for the month of March (Control 6). We recomputed the amortization and
EYG 560NCE (July 2013)
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Yes
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Additional
observations
No
Yes
No
No
N/A
Additional
observations
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Additional
observations
Yes