DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT
NATIONAL CAPITAL REGION (FO- NCR)
TEMPLATE 9: DESIGNING AUDIT PROCEDURES
[Purpose: To identify the nature, timing, and extent of further audit procedures necessary to carry out the audit]
DESIGNING AUDIT PROCEDURES
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Cash in Bank – LCCA
Valuation and
Allocation;
Rights and
Obligation;
Existence
Risk of material misstatement
(Refer to Templates 7 & 8)
Reconciliation (Financial Risk) - Risk
that the Agency’s financial statements
might not be fairly presented due to
the delay in the preparation of
reconciliation of accounts.
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
High Control
Assurance
Substantive
Analytical
Procedures
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
Description and
nature of audit
procedures
Substantive Tests of details
(Test of controls,
substantive or
combined)
Bank Confirmation – Bank
confirmation letters will be sent to
all bank accounts for balances as at
December 31, 2015.
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.
Bank reconciliations – Examine the
entity’s bank reconciliations as of
period end, including cash-intransit accounts, (e.g., in
subledgers) to verify the proper
reconciliation of bank statements
and general ledger accounts.
Investigate any unusual items and
test other reconciling items based
on the established threshold.
PROCESS LEVEL RISK:
- The amount of funds
disbursed does not match
with the budget allotment
- Unauthorized disbursement
- Disbursement of fund might
not be recorded in the proper
Cash cutoff – Test cutoff of cash
receipts and cash disbursements
for transfers between different
bank accounts at the balance sheet
date.
1
Extent of
testing
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Timing
(what period
and when to
perform audit
procedures)
Three months
after planning
Assertion/
Financial Statement
as a whole
Risk of material misstatement
(Refer to Templates 7 & 8)
(Refer to Templates
7 & 8)
Cash – MDS,
Regular
Existence
Valuation and
Allocation;
Rights and
Obligation;
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Substantive
Analytical
Procedures
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
Timing
(what period
and when to
perform audit
procedures)
period
Voucher may be paid twice
Reconciliation (Financial Risk) - Risk
that the Agency’s financial statements
might not be fairly presented due to
the delay in the preparation of
reconciliation of accounts.
High Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
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
- Unauthorized disbursement
- Disbursement of fund might
not be recorded in the proper
period
- Voucher may be paid twice
Advances to Special
Disbursing Officers
Description and
nature of audit
procedures
Employee Fraud (Financial/Control
Risk) - Possible loss or
misappropriation of unutilized cash
Bank Confirmation – Bank
confirmation letters will be sent to
all bank accounts for balances as at
December 31, 2015.
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
Full Substantive
Procedures
Examine all key
items/
transactions
Within three
months after
Bank reconciliations – Examine the
entity’s bank reconciliations as of
period end, including cash-intransit accounts, (e.g., in
subledgers) to verify the proper
reconciliation of bank statements
and general ledger accounts.
Investigate any unusual items and
test other reconciling items based
on the established threshold.
Cash cutoff – Test cutoff of cash
receipts and cash disbursements
for transfers between different
bank accounts at the balance sheet
date.
Low Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
2
Cash Count – Surprised count shall
be performed before yearend and
rollforward procedures will be
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Existence;
Risk of material misstatement
(Refer to Templates 7 & 8)
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
advance, caused by non appearance of
the beneficiaries during the scheduled
pay out, still in the hands of the SDO
due to late liquidation/refund of
unused fund.
Substantive
Analytical
Procedures
Description and
nature of audit
procedures
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
investigations shall be made
for unusual significant
movement
done to account for transactions
from cash count date up to
December 31, 2015
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
Agreement of subledger and
general ledger - Agree receivables
subledger to the general ledger
control account. Investigate any
unusual items and test other
reconciling items based on the
established testing threshold
Timing
(what period
and when to
perform audit
procedures)
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
planning
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
PROCESS LEVEL RISK:
- The amount of funds
disbursed does not match
with the budget allotment
- Unauthorized disbursement
- Disbursement of fund might
not be recorded in the proper
period
- Voucher may be paid twice
Accounts
Receivable
Valuation and
Allocation;
Existence;
Reconciliation (Financial Risk) - Risk
that the Agency’s financial statements
might not be fairly presented due to
the delay in the preparation of
reconciliation of accounts.
Low Control
Assurance
Verification of existence – Verify
the existence of receivables
through confirmation or, when
appropriate, examination of
subsequent cash receipts, or
examination of other supporting
3
Full Substantive
Procedures
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Risk of material misstatement
(Refer to Templates 7 & 8)
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Substantive
Analytical
Procedures
Description and
nature of audit
procedures
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
Timing
(what period
and when to
perform audit
procedures)
documentation.
Loans Receivable
Valuation and
Allocation;
Existence;
Reconciliation (Financial Risk) - Risk
that the Agency’s financial statements
might not be fairly presented due to
the delay in the preparation of
reconciliation of accounts.
Low Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
Agreement of subledger and
general ledger - Agree receivables
subledger to the general ledger
control account. Investigate any
unusual items and test other
reconciling items based on the
established testing threshold
Full Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
Verification of existence – Verify
the existence of receivables
through confirmation or, when
appropriate, examination of
subsequent cash receipts, or
examination of other supporting
documentation.
Due from GOCCs
Valuation and
Allocation;
Rights and
Obligation;
Existence
PROCESS LEVEL RISKS:
- The agency might have
purchases that are not
included in the Annual
Purchase Plan (APP)
- The agency might have sent
invitations to bid for unfunded
purchase request
- Multiple POs resulting to
double payment to suppliers
- Unauthorized purchases
- Related assets, expenses and
High Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
Agreement of subledger and
general ledger - Agree receivables
subledger to the general ledger
control account. Investigate any
unusual items and test other
reconciling items based on the
established testing threshold
Verification of existence – Verify
the existence of receivables
through confirmation or, when
4
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Risk of material misstatement
(Refer to Templates 7 & 8)
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Substantive
Analytical
Procedures
payable, if on account, might
not be recorded in the proper
period.
Due from LGUs
Valuation and
Allocation;
Rights and
Obligation;
Existence
Inventories
Valuation and
Allocation;
Rights and
Obligation;
PROCESS LEVEL RISKS:
- The agency might have
purchases that are not
included in the Annual
Purchase Plan (APP)
- The agency might have sent
invitations to bid for unfunded
purchase request
- Multiple POs resulting to
double payment to suppliers
- Unauthorized purchases
- Related assets, expenses and
payable, if on account, might
not be recorded in the proper
period.
Reconciliation (Financial Risk) - Risk
that the Agency’s financial statements
might not be fairly presented due to
the delay in the preparation of
reconciliation of accounts.
Description and
nature of audit
procedures
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
Timing
(what period
and when to
perform audit
procedures)
appropriate, examination of
subsequent cash receipts, or
examination of other supporting
documentation.
High Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
Agreement of subledger and
general ledger - Agree receivables
subledger to the general ledger
control account. Investigate any
unusual items and test other
reconciling items based on the
established testing threshold
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
Full Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
Three months
after planning
Verification of existence – Verify
the existence of receivables
through confirmation or, when
appropriate, examination of
subsequent cash receipts, or
examination of other supporting
documentation.
Low Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
5
Observation of physical
inventories - Evaluate
management’s instructions and
procedures for recording and
controlling the results of the
entity’s physical inventory
counting. Observe the performance
of the entity’s count procedures
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Risk of material misstatement
(Refer to Templates 7 & 8)
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Substantive
Analytical
Procedures
Existence
Description and
nature of audit
procedures
Substantive Tests of details
(Test of controls,
substantive or
combined)
and perform test counts. Trace test
counts to the entity’s inventory
compilation and determine that the
inventory compilation accurately
reflects actual inventory count
results.
Confirmation of inventories held
by others - If significant, confirm
inventories held by others at the
physical inventory date and trace
confirmed quantities to the
inventory compilation; consider
observing these physical
inventories as well.
Reconciliation of inventory
compilation with general ledger Review the reconciliation of the
valued physical inventory
compilation with the general ledger
account balances and the perpetual
inventory records. Investigate any
unusual items and test other
reconciling items based on the
established testing threshold.
Valuation in accordance with
accounting policies - Test the
valuation of inventory to verify that
it is performed in accordance with
6
Extent of
testing
P40,620,168.95.
Timing
(what period
and when to
perform audit
procedures)
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Risk of material misstatement
(Refer to Templates 7 & 8)
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Substantive
Analytical
Procedures
Description and
nature of audit
procedures
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
Timing
(what period
and when to
perform audit
procedures)
the entity’s accounting policies and
applicable financial reporting
framework.
Net realizable value testing - Test
the provisions to reduce the
valuation of inventory to net
realizable value, (e.g., obsolescence
and other reserves) and verify that
appropriate adjustments are made
in accordance with the entity's
accounting policies and applicable
financial reporting framework.
Property, Plant and
Equipment
Valuation and
Allocation;
Rights and
Obligation;
Reconciliation (Financial Risk) - Risk
that the Agency’s financial statements
might not be fairly presented due to
the delay in the preparation of
reconciliation of accounts.
Low Control
Assurance
Trend Analysis – Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement
Existence
Agreement of subledgers with
general ledger - Obtain a schedule
of property, plant and equipment,
including capitalized leases, and
related additions, disposals,
reclassifications and depreciation,
depletion and/or amortization (PPE
subledger) and agree balances to
the respective general ledger
accounts.
Additions and disposals - For
significant additions (including
capitalized labor, borrowing costs
and other acceptable costs) and
disposals during the period,
7
Full Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
Assertion/
Financial Statement
as a whole
(Refer to Templates
7 & 8)
Risk of material misstatement
(Refer to Templates 7 & 8)
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Substantive
Analytical
Procedures
Description and
nature of audit
procedures
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
Timing
(what period
and when to
perform audit
procedures)
examine invoices, capital
expenditure authorizations, leases
and other data that support these
additions and disposals.
Depreciation - Test depreciation
expense in a manner responsive to
our combined risk assessment with
reference to the entity’s accounting
policy and applicable financial
reporting framework.
Impairments of property, plant
and equipment - Use information
obtained during the audit in
determining whether management
has identified appropriate
indicators of impairment and verify
that appropriate adjustments are
made in accordance with the
entity's accounting policies and
applicable financial reporting
framework.
Supplies Expense
Cutoff;
Occurrence;
PROCESS LEVEL RISKS:
- The agency might have
purchases that are not
included in the Annual
Purchase Plan (APP)
- The agency might have sent
invitations to bid for unfunded
High Control
Assurance
Trend Analysis - Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement. Also, comparing
8
Test of Transactions – Identify key
items/transactions and traced to
supporting documents and check
the appropriateness of dates of
recording.
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Three months
after planning
Assertion/
Financial Statement
as a whole
Risk of material misstatement
(Refer to Templates 7 & 8)
(Refer to Templates
7 & 8)
purchase request
Multiple POs resulting to
double payment to suppliers
- Unauthorized purchases
- Related assets, expenses and
payable, if on account, might
not be recorded in the proper
period.
PROCESS LEVEL RISKS:
- The agency might have
purchases that are not
included in the Annual
Purchase Plan (APP)
- The agency might have sent
invitations to bid for unfunded
purchase request
- Multiple POs resulting to
double payment to suppliers
- Unauthorized purchases
- Related assets, expenses and
payable, if on account, might
not be recorded in the proper
period.
PROCESS LEVEL RISKS:
- The agency might have
purchases that are not
included in the Annual
Purchase Plan (APP)
- The agency might have sent
invitations to bid for unfunded
purchase request
Extent of
reliance on
controls
(Refer to
Templates 7 &
8)
Cutoff;
Occurrence;
Repairs and
Maintenance
Cutoff;
Occurrence;
Substantive Tests of details
Extent of
testing
(Test of controls,
substantive or
combined)
month to month balances to
identify unusual
fluctuations.
-
Training Expense
Substantive
Analytical
Procedures
Description and
nature of audit
procedures
Timing
(what period
and when to
perform audit
procedures)
Materiality of
P40,620,168.95.
High Control
Assurance
Trend Analysis - Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement. Also, comparing
month to month balances to
identify unusual
fluctuations.
Test of Transactions – Identify key
items/transactions and traced to
supporting documents and check
the appropriateness of dates of
recording.
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95.
Three months
after planning
High Control
Assurance
Trend Analysis - Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement. Also, comparing
month to month balances to
9
Test of Transactions – Identify key
items/transactions and traced to
supporting documents and check
the appropriateness of dates of
recording.
Combined Test of
Controls and
Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
Three months
after planning
Assertion/
Financial Statement
as a whole
Risk of material misstatement
(Refer to Templates 7 & 8)
(Refer to Templates
7 & 8)
(Refer to
Templates 7 &
8)
-
Subsidy – Others
Cut-off
Multiple POs resulting to
double payment to suppliers
- Unauthorized purchases
- Related assets, expenses and
payable, if on account, might
not be recorded in the proper
period.
Employee Fraud (Financial/Control
Risk) - Possible loss or
misappropriation of unutilized cash
advance, caused by non appearance of
the beneficiaries during the scheduled
pay out, still in the hands of the SDO
due to late liquidation/refund of
unused fund.
Extent of
reliance on
controls
Substantive
Analytical
Procedures
Description and
nature of audit
procedures
Substantive Tests of details
(Test of controls,
substantive or
combined)
identify unusual
fluctuations.
Low Control
Assurance
Extent of
testing
Timing
(what period
and when to
perform audit
procedures)
P40,620,168.95.
Trend Analysis - Comparing
Prior year and Current Year
balances and further
investigations shall be made
for unusual significant
movement. Also, comparing
month to month balances to
identify unusual
fluctuations.
Test of Transactions – Identify key
items/transactions and traced to
supporting documents and check
the appropriateness of dates of
recording.
Conclusion:
Based upon the risk assessment procedures further audit procedures have been designed that are sufficient and appropriate to carry out the audit.
10
Full Substantive
Procedures
Examine all key
items/
transactions
above certain
percentage of
Performance
Materiality of
P40,620,168.95
Three months
after planning