NCE Understand SCOTs/significant disclosure processes and
perform walkthroughs
Entity name:
Date of financial statements:
Significant class of transactions (SCOT) / disclosure process:
Name:
Nature:
[indicate whether SCOT is Routine or Non-routine]
Owner:
This form has been designed to support the audit of non-complex entities (NCE) and
is not to be used for entities that do not meet the NCE criteria for use.
When and how to use this form
A.) Requirement for use: This form is optional, but supports meeting GAM requirements.
B.) How to use this form: Complete all relevant check-boxes and text fields.
Purpose
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)).
Completion of this form addresses the EY Canvas tasks:
► Understand SCOTs, identify WCGWs and relevant controls and relate them to relevant
SCOTs and significant disclosure processes
► Create a task to document understanding of a SCOT or significant disclosure process
When we test controls for routine SCOTs, we use Form 813GL NCE Understand routine SCOTs,
perform walkthroughs and test controls form.
Form 806GL (29 March 2018)
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NCE Understand SCOTs/significant disclosure processes and
perform walkthroughs
Our understanding of the critical path (SCOTS 2)
Document below our understanding of the critical path of the SCOT/ significant disclosure
process, including the major inputs and outputs. The critical path includes:
 Initiation: the point where the transaction first enters the entity’s 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 determine 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. Document the attributes of the related IT applications in the Audit
planning template or equivalent documentation.
For the following SCOTs, refer to the appropriate form:
 Estimation SCOTs (Form 201GL Accounting estimates form)
 Related party relationships and transactions, when we identify a related party SCOT
(Form 212GL Related parties form)
For significant risks, we identify controls relevant to the audit (refer to UTB 4) and document
these in Form 800GL NCE Audit planning template (APT).
Describe the critical path
Performed by
(job title
only)
Automated
aspects
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 ESTIMATES for the required documentation of our understanding of
estimation SCOTs, including relevant controls.
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NCE Understand SCOTs/significant disclosure processes and
perform walkthroughs
Document what can go wrongs (SCOTS 4)
We use our understanding of the critical path and the policies and procedures to identify
WCGWs.
We document the identified WCGWs in EY Canvas.
Conclusion: Scope & Strategy
We sign-off this form in EY Canvas to evidence the preparation, review and approval
of this form at the Scope & Strategy phase of the audit as well as completion of the
following EY Canvas task at this phase of the audit:
► Understand SCOTs, identify WCGWs and relevant controls and relate them to
relevant SCOTs and significant disclosure processes
The following EY Canvas task does not require related evidence to be marked complete,
however, we may use this form to help complete this task:
► Create a task to document understanding of a SCOT or significant disclosure
process (e.g., WT – SCOT name)
Walkthrough and other confirmation procedures (SCOTS 3)
Describe the walkthrough and other procedures performed to confirm our understanding of the
SCOT, 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 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 and other confirmation procedures
Transaction selected for
walkthrough:
Individual(s) we talked with to
confirm our understanding:
Date:
Description of the walkthrough procedures performed including our inquiries:
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NCE Understand SCOTs/significant disclosure processes and
perform walkthroughs
B) Segregation of incompatible duties, authorization and
management override of controls
Additional
observations
Yes
No
a. Was anything noted in our walkthrough procedures that
would indicate there are incompatible duties?
☐
☐
If we answered “Yes” to the above:
Do the incompatible duties represent a deficiency in the
design of controls that is not sufficiently mitigated by
other management actions or controls that have been
identified?
☐
☐
b. Was anything noted in our walkthrough procedures that
would indicate there are issues related to authorization?
☐
☐
If we answered “Yes” to the above:
Do the authorization issues represent a deficiency in the
design of controls that is not sufficiently mitigated by
other management actions or controls that have been
identified?
☐
☐
c. Was anything noted in our walkthrough of controls that
indicate the potential for management override of controls
or that such override may have occurred?
☐
☐
If we answered “Yes” to the above:
Does the potential for management override of controls
represent a deficiency in the design of controls that is not
sufficiently mitigated by other management actions or
controls that have been identified?
☐
☐
N/A
Additional
observations
If we answered “Yes” to the above, provide further
documentation and the related effect on our audit
strategy.
If we answered “Yes” to the above, provide further
documentation and the related effect on our audit
strategy.
If we answered “Yes” to the above, provide further
documentation and the related effect on our audit strategy.
C) Conclusion
Yes
No
Did our walkthrough procedures confirm
our understanding of the SCOT and/or
significant disclosure process?
☐
☐
For SCOTs and significant disclosure
processes affected by significant risks, did
our walkthrough procedures confirm that
the controls relevant to the audit have been
properly designed and implemented?
☐
☐
☐
Conclusion: Execution
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NCE Understand SCOTs/significant disclosure processes and
perform walkthroughs
We sign-off this form, including the above conclusion statements, in EY Canvas to
evidence the preparation, review and approval of this form at the Execution phase of
the audit as well as completion of the following EY Canvas task at this phase of the
audit:
► Task created by the audit team to document understanding of a SCOT or
significant disclosure process (e.g., WT – SCOT name)
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