While auditing ANJ Industries Private Limited, CA J has decided that it would be appropriate to examine 100% of the items comprising turnover of 30…

While auditing ANJ Industries Private Limited, CA J has decided that it would be appropriate to examine 100% of the items comprising turnover of 30 crores as reflected in its financial statements. In this regard, he has designed tests of details for transactions forming part of company's turnover. The sales function is automated in the company's information system involving repetitive nature of calculations. Further, in respect of designing of tests of controls pertaining to turnover, he is in a fix. While verifying turnover of the company, CA J ensures that all the sales are correctly recorded in the books of accounts based on the invoices and discounts have been properly adjusted. Similarly, in respect of verification of employee benefit expenses reflected in the financial statements, he ensured that TDS related adjustments are correctly reconciled and accounted for. Ankush is an article assistant who has recently joined CA J for practical training. He is also part of the team assisting seniors. Although he has read about assertions, there remain several doubts about assertions in his mind. He noted down the following points about assertions as per his understanding: (i) Assertions are the representations made by the auditors. (ii) Assertions are generally explicit and not implied. (iii) Verification of the assertions helps the auditor in finding out whether financial statements are in accordance with applicable financial reporting framework or not. In normal course of business, the company also holds a part of goods as a consignee. While verifying assertions relating to inventories, he ensures that inventory held by the company as consignee of goods on behalf of third parties is excluded from inventories.