DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT
NATIONAL CAPITAL REGION (FO- NCR)
TEMPLATE 7:LINKING RISK AND CONTROLS AT THE ASSERTION LEVEL
[Purpose: To document the degree of intended reliance (high or low) on relevant controls to respond to the assessed risks of material misstatements and to document any risk of material misstatements or
assertions that can only be addressed through reliance on controls]
NATURE OF
CONTROL RISK
ASSERTIONS
RISK
TESTING
[Low (rely on the
(Occurence; Existence;
ASSESSMENT
RELATED ACCOUNT
INHERENT
internal control)/
Rights & Obligations;
CONTROLS TO ADDRESS
[Low/
(Test of
(ii)
RISK
Medium/
RISK OF MATERIAL MISSTATEMENT (i)
Completeness;
RISK IDENTIFIED
Moderate/
Controls/Substa
(Low/High)
High (Not Reliance
Valuation& Allocation;
(iv)
High]
ntive
(iii)
on Internal
Classifications;
(iii)
Procedures/
Controls]
Accuracy; Cut Off)
Analytical
(iii)
Procedures)
Employee Fraud (Financial/Control Risk) Possible loss or misappropriation of unutilized
Advances to Special
Existence;
Full Substantive
cash advance, caused by non appearance of the Disbursing Officers
Testing (To
High
High
None
High
beneficiaries during the scheduled pay out, still
carry forward to
in the hands of the SDO due to late
Subsidy-Others
Cutoff
Template 9)
liquidation/refund of unused fund.
Cash in Bank – LCCA;
Cash-MDS, Regular;
Valuation and
Reconciliation (Financial Risk) - Risk that the
Accounts Receivables;
Allocation;
Agency’s financial statements might not be
Loans;
Full Substantive
Rights and Obligation;
High
High
None
High
fairly presented due to the delay in the
Inventories;
Testing
Completeness;
preparation of reconciliation of accounts.
Property, Plant and
Existence
Equipment
PROCESS LEVEL RISKS:
The agency might have purchases that are not
included in the Annual Procurement Plan (APP)
Supplies Expense;
Training Expenses;
Repairs and
Maintenance Expenses
Cutoff;
Occurrence;
PROCESS LEVEL RISKS:
The agency might have sent invitations to bid
for unfunded purchase request
Supplies Expense;
Training Expenses;
Repairs and
Maintenance Expenses
Cutoff;
Occurrence;
High
High
Low
Verification by the BAC
whether the item is
included in the Annual
Procurement Plan
Low
Approval of Purchase
Request by the ARD and
RD after checking the
availability of funds by
the Budget Officer
Moderate
Test of relevant
controls and
minimum
substantive
procedures.
Moderate
Test of relevant
controls and
minimum
substantive
procedures..
RISK OF MATERIAL MISSTATEMENT (i)
RELATED ACCOUNT
(ii)
ASSERTIONS
(Occurence; Existence;
Rights & Obligations;
Completeness;
Valuation& Allocation;
Classifications;
Accuracy; Cut Off)
INHERENT
RISK
(Low/High)
(iii)
CONTROL RISK
[Low (rely on the
internal control)/
Medium/
High (Not Reliance
on Internal
Controls]
(iii)
High
High
None
CONTROLS TO ADDRESS
RISK IDENTIFIED
(iv)
PROCESS LEVEL RISKS:
Multiple POs resulting to double payment to
suppliers
Supplies Expense;
Training Expenses;
Repairs and
Maintenance Expenses
PROCESS LEVEL RISKS:
Unauthorized purchases
Supplies Expense;
Training Expenses;
Repairs and
Maintenance Expenses
Cutoff;
Occurrence;
High
Low
Approval of Purchase
Order/MOA by the RD
and ARD after
certification of
Accountant for
availability of Funds
Supplies Expense;
Training Expenses;
Repairs and
Maintenance Expenses
Cutoff;
Occurrence;
High
High
Existence
High
PROCESS LEVEL RISKS:
Related assets, expenses and payable, if on
account, might not be recorded in the proper
period.
Accounting for Donations (Business/Financial
Risk)– risk that the donation transactions might
not have been accounted properly due to
weakness in internal controls that might put
the integrity of the agency at stake as a result
of several individuals rallying on DSWD.
PROCESS LEVEL RISK:
The amount of funds disbursed does not match
with the budget allotment
Cash-MDS, Regular
Cash in Bank – LCCA
Cash in Bank, CashMDS, Regular ,
Advances to SDOs,
Advances to Officers
and Employees, Due
from GOCCs, Due from
LGUs and Various
Expense
Cutoff;
Occurrence;
Valuation and
Allocation;
Accuracy
High
RISK
ASSESSMENT
[Low/
Moderate/
High]
(iii)
NATURE OF
TESTING
(Test of
Controls/Substa
ntive
Procedures/
Analytical
Procedures)
High
Full Substantive
Testing.
Moderate
Test of relevant
controls and
minimum
substantive
procedures.
None
High
Full Substantive
Testing
High
None
High
Full Substantive
Testing
Low
The Budget unit officer
checks the ObS, DV and
other supporting
documents, enters into
the Registry of Allotment
and signs in the Box B of
the ObS which are then
reviewed by the Regional
Moderate
Test of relevant
controls and
minimum
substantive
procedures.
RISK OF MATERIAL MISSTATEMENT (i)
RELATED ACCOUNT
(ii)
ASSERTIONS
(Occurence; Existence;
Rights & Obligations;
Completeness;
Valuation& Allocation;
Classifications;
Accuracy; Cut Off)
INHERENT
RISK
(Low/High)
(iii)
CONTROL RISK
[Low (rely on the
internal control)/
Medium/
High (Not Reliance
on Internal
Controls]
(iii)
CONTROLS TO ADDRESS
RISK IDENTIFIED
(iv)
RISK
ASSESSMENT
[Low/
Moderate/
High]
(iii)
NATURE OF
TESTING
(Test of
Controls/Substa
ntive
Procedures/
Analytical
Procedures)
accountant who will sign
in the Box A of ObS.
PROCESS LEVEL RISK:
Unauthorized disbursement
Cash in Bank, CashThe appropriate person,
MDS, Regular ,
depending on the
Advances to SDOs,
amount of threshold,
Advances to Officers
Rights and Obligation;
High
Low
reviews and approves the
and Employees, Due
Accuracy;
Disbursement Voucher
from GOCCs, Due from
and countersigns the
LGUs and Various
check
Expense
PROCESS LEVEL RISK:
Cash in Bank, CashDisbursement of fund might not be recorded in MDS, Regular ,
the proper period
Advances to SDOs,
Advances to Officers
Cutoff
High
High
None
and Employees, Due
from GOCCs, Due from
LGUs and Various
Expense
PROCESS LEVEL RISK:
Cash in Bank, CashVoucher may be paid twice
MDS, Regular ,
Valuation and
The paid voucher and
Advances to SDOs,
Allocation;
supporting documents
Advances to Officers
Completeness;
High
Low
must be stamped “PAID”
and Employees, Due
Rights and Obligation;
after payment to prevent
from GOCCs, Due from
double payment.
LGUs and Various
Expense
Conclusion: In my opinion, the risk for financial statements and controls to respond to them have been identified, and carried forward to Template 9.
Note :
i.
Is there a risk of material misstatement? Describe the risk in the appropriate box (Template 6 – Risk Register)
ii.
Classes of Transaction or Financial Statement Level
Moderate
Test of relevant
controls and
minimum
substantive
procedures.
High
Full Substantive
Testing
Moderate
Test of relevant
controls and
minimum
substantive
procedures.
iii.
iv.
Based on Auditor’s judgement on the transactions held
Identify relevant controls to address risks of material misstatements [brought forward from Record ofPotential Controls (Template 5)