Concept Maps of Expenditure and Disbursement Cycle

Account Inventory Current Non-Current Expenses

Liabilities Liabilities

Standard(s) PAS 2 PAS 37 PAS 32,39, P Various

FRS 7,9

Initial Costs plus Invoice amount Amortized cost Period when

Recognition  taxes, transport, and Best estimate (effective interest revenues to which
handling, net of trade method) they relate are
discounts received recognized
 Cost on conversation  Cause and Effect
 Other costs incurred  Systematic
in bringing the Allocation
inventories to their  Immediate
present location and
condition

Subsequent Lower of cost and net None None

Measurement realizable value
(NRV)

Impairment When the sales price None None

moves below the
inventory at purchase
price, you have an
impairment.

Derecognition Sold Paid or settled Paid or settled

Obsolescence
Exchanged

FS Assertions Existence, Rights and Completeness, Completeness, Existence, Rights and

– Balances Obligations, Presentation and Presentation and Obligations,
Completeness and Disclosure and Disclosure and Completeness and
Valuation Valuation Valuation Valuation

FS Assertions Occurrence, Completeness, Completeness, Occurrence,

- Transactions Completeness, Accuracy, Cut-off and Accuracy, Cut-off and Completeness,
Accuracy, Cut-off and Classification Classification Accuracy, Cut-off and
Classification Classification

Risk and Loss, theft, damage, Understatement or

Threats and unreliable omitting of debt
suppliers. Wrong classification
of debt i.e. non-
current liabilities
recorded as current
as on the balance
sheet date.

Internal Protect its assets

Controls that against theft and
should be in waste.
place Ensure compliance
with company policies
and federal law.
Evaluate the
performance of all
personnel to promote
efficient operations.
Ensure accurate and
reliable operating
data and accounting
reports.

Appropriate
Audit
Procedures