a. Existence - the aim here is to ascertain that the account being tested consists of items which really exist, for example, all the items which are recorded in inventory do not include items that do not exist and or the credit sales only contain items that have incurred.
b. Completeness - here the auditor wants to ascertain that no items are left out.
c. Accuracy - the aim here is to ascertain that every item in the account is correctly recorded, that is, there are no misstatements.
d. Classification- the aim is to ascertain that every item in the account is correctly classified in the ledger, for example, trade debts payable within one year or one accounting period, are classified as a current asset in accounts receivable. Those payable outside the period is classified as a long term asset.
e. Cut-off- here, the auditor aims at ascertaining that the transactions are recorded in the correct period. For example, the sales for the current period as recorded as such and not included as the sales in the next period. Special attention should be paid to transactions that occur near the balance sheet date.
f. Detail tie-in- the aim here is, the auditor wants to ensure the balances in the general ledger and the subsidiary ledger are reconciled. for example, for accounts receivable, the auditor ascertains that the balance of the account in the general ledger is the same as the total of the debtors in the subsidiary ledger.
g. Net Realizable value- Here the auditor wants to ascertain that the item being examined is shown at net realisable value. for example, for accounts receivable, the balance shown should only consist of those that are collectible, that is , after deducting the allowance for bad debts.
h. Right and Obligation- This relates to assets and liabilities. All assets shown in the financial statements, should only consist of those where the client has the right to them. All liabilities should consist only of those that are the obligations of the client.
i. Presentation and Disclosure- this means all accounts are properly classified and described in the financial statements. For example, accounts receivable should be placed under current assets and should be described as such not as note receivable.
