Revenue Cycle
ABC’s revenue clerk can create and edit customer profiles with no oversight. Which assertion is at risk?
Existence
ABC relies on manual inventory management. If inventory is received, but not recorded, would this result in an overstatement or understatement of inventory?
Understatement
Which income statement account is directly impacted if employee bonuses are overstated due to lack of documentation?
Salaries Expense/Payable
ABC’s greenhouse gases are heavily based on manual data entry and engineer judgement, what is the most prevalent assertion?
Accuracy/Valuation
In The Wolf of Wall Street, Jordan inflates revenue with fake sales. Which assertion is violated?
Existence
Due to inadequate segregation of duties in the revenue process cycle, what financial statement impact does it have?
Overstatement of revenue
ABC relies on manual matching of receipts, increasing the likelihood of duplicate payments. What is the key assertion here?
Accuracy
ABC’s bonus accruals are manually adjusted after year-end. Which audit assertion does this test?
Cut-off
This assertion is at risk if ABC attributes emissions to the wrong facility or source due to poor documentation or inconsistent tracking procedures.
Presentation/Disclosure
ABC buries related party transactions deep in the footnotes with vague descriptions. Which assertion is most at risk?
Presentation and Disclosure
Manual handwritten delivery tickets risk which revenue assertion?
Completeness
If raw materials are used in production before being recorded in the system, what assertion is at risk?
Completeness or Existence
What payroll assertion is affected if duplicate salary payments occur due to weak controls?
Accuracy / Valuation
ABC has not fully tracked emissions from outsourced lab testing, upstream transport, or chemical suppliers, increasing the risk to this audit assertion.
Completeness
Dwight from “The Office” handles payroll for a day and accidentally gives himself double benefits. Which account is most likely overstated on the financial statements?
Employee Benefits Payable
If one AR clerk handles billing and collections, which control weakness is present?
Segregation of duties
This assertion is at risk when ABC records inventory or payables it doesn’t actually own.
Rights and obligations
ABC’s payroll system depends on manual entry and no system checks. What assertion does this concern?
Valuation or completeness
ABC relies on handwritten logs, observational walkarounds, and anecdotal explanations for emissions deviations instead of structured root cause analysis or automation. This affects which audit assertions the most?
Accuracy
"When you’re the only one in payroll and go on vacation"—which risk does this meme joke about?
Lack of backup controls
ABC risks overstating revenue if fictitious sales go unverified. Which assertions does this impact?
Existence and Accuracy
Receipts are manually created using MS Word and tracked in Excel. If we are concerned about the completeness of key information in the F/S regarding receipts, what risk exists?
Accounting risk
ABC’s payroll changes can be made verbally without formal documentation. What financial statement assertion is at risk?
Completeness
Despite growing regulatory expectations, ABC has no dedicated sustainability officer, no ESG committee, and relies on informal training and judgment-driven spreadsheets. What assertions are tied to this issue?
Presentation/Disclosure
“When your bonus depends on EBITDA... and you control the books” – what red flag is this? And what assertions would be impacted?
FRAUD #GetRichOrDieTrying
Valuation and Existence