Financial Improvement and Audit Readiness Methodology

Assertion Work Product Example

Test Plans and Test Results

Detailed Activity 1.3.3 - Execute Tests of Controls (Reporting Entities)

Detailed Activity 1.3.4 - Summarize Test Results (Reporting Entities)
Detailed Activity 1.5.3 - Execute Tests of Controls (Service Providers)
Detailed Activity 1.5.4 - Summarize Test Results (Service Providers)
Detailed Activity 1.5.5 - Identify, Classify, and Evaluate Deficiencies (Service Providers)

NOTE: The Tool/Template/Work Product in this workbook includes an internal control test plan template
and instructions for using the template, as well as two example test plans. Financial Reporting Objectives
and Control Activities would be identified if the template is properly completed.

Table of Contents
Test Plans and Test Results - Template, Template Instructions, and Example
Test Plan Template See spreadsheet titled "Test Plan - Template" and "Test Plan - Results -
Template"
Test Plan Template Instructions See spreadsheet titled "Test Plan - Instructions"
Example Test Plan #1 See spreadsheets titled "SBR Test Plan - Example #1" and "SBR Test Plan -
Results - EX #1"
Example Test Plan #2 See spreadsheet titled "E&C Test Plan - Example #2" and "E&C Test Plan -
Results - EX #2"
 TEMPLATE

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
1 DoD Entity 4 Preparer
2 Financial Statement Line 5 Preparer's
Item(s) Phone #
3 Business Cycle(s)/Assessable 6 Documentation
Unit/Sub-Assessable Units Location
7 Financial Statement
Assertion(s)
8 Key Risk(s) of Material
Misstatement (ROMM)
9 Financial Reporting
Objective(s)
(FROs)
10 Control Activity Description
11 Test Objective(s)
12 Control Type
13 Control Frequency
14 Testing Period
15 Test Method
16 Transaction Universe and
Reconciliation
17 Sampling Technique
18 Sample Size and Basis
19 Acceptable Number of
Deviations/Tolerable
Misstatement
20 Location of Testing
21 Test Description
22 Test Procedures and Testing
Attributes
23 Test Results
24 Test Results
Evaluation of Test Results
25 Control Effectiveness
Conclusion
26 Tester's Signature & Date
27 Supervisor's Signature of
Acceptance & Date

Template Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider) 1
 TEMPLATE

Test Plan - Test Work Table

Testing
Attributes
Sample # Sample ID # Description A B Sample Pass or Fail? Description of Exception/Rationale Work Paper Reference
1 Pass
2 Pass
3 Pass
4 Pass
5 Pass
6 Pass
7 Pass
Total Sample Failures: 0 0

Tickmark Legend
0 No Exception
1 Exception

Template Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider) 2
 TEMPLATE INSTRUCTIONS

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
1 DoD Entity Enter the name of the component (e.g., Army, 4 Preparer Enter the name of the person completing
Navy, Air Force) or other defense organization (i.e., the Test Plan form.
DCMA, DTRA, DLA).
2 Financial Enter the financial statement line item. 5 Preparer's Enter the preparer's office phone number.
Statement Line Phone #
Item(s)
3 Business Enter the name of the high level end to end 6 Documentation If applicable to the test being performed,
Cycle(s)/Assessabl business cycle (i.e., Hire to Retire, Procure to Pay, Location cite the location where documents (to
e Unit/Sub- Budget to Report) and specific sub-process support test) are stored. Also cite the
Assessable Units associated with the control activity (i.e., office/organization responsible for
disbursement of civilian payroll). maintaining the documentation.

7 Financial Identify the financial statement assertion (Existence or Occurrence), Completeness, Valuation, Rights and Obligations, or
Statement Presentation and Disclosure) that control activity is designed to meet.
Assertion(s)
8 Key Risk(s) of Identify the key risk(s) of material misstatement which may occur in the financial statement line item, accounting
Material application and associated business process.
Misstatement Note: The risks of material misstatements must be from the listing of key risk(s) of material misstatements in Section 5 or
(ROMM) Appendix B (sections B.1.1, B.2.2, B.3.2, and B.3.3) of the FIAR Guidance.

9 Financial Identify the financial reporting objective(s) that is/are relevant to the aforementioned business process(es) and mitigates
Reporting the identified key risk(s) of material misstatement.
Objective(s) Note: The financial reporting objective(s) must be from the listing of financial reporting objectives/outcomes in Section 5
(FROs) or Appendix B (sections B.1.1, B.2.2, B.3.2, and B.3.3) of the FIAR Guidance.

10 Control Activity Identify the control activity that is currently in place to mitigate the key risk(s) of material misstatement and achieve the
Description aforementioned financial reporting objective(s). Include a detailed description of the control activity, noting the
following:
1) Who performs the control activity? For manual control activity, there should be a preparer and reviewer/approver.
2) How is the control activity performed?
3) How (and when) frequently is the control activity performed?
4) How is performance of the control activity documented (i.e., what forms are used)?
5) How is performance of the control activity evidenced (i.e., signature and date on form)

11 Test Objective(s) Enter the purpose/objective of the control test (e.g., to verify that the control activity is operating as described and
intended throughout the organization)
Example: Verify that the Fund Balance with Treasury Reconciliation: is performed timely and by authorized personnel; is
reviewed and approved by appropriate personnel; and identifies reconciling items which are researched and resolved via
appropriate adjusting entries.

12 Control Type Identify whether the control activity is performed manually (e.g., manual authorization, review or reconciliation, etc.), is
automated (i.e., system edit checks, system access restrictions and authorizations, automated review and approvals,
etc.), or performed manually using system generated information (i.e., physically verifying existence of inventory using
system generated inventory report).
Note: Control activity should be documented on the "Controls Assessment" form.

13 Control Frequency Note the frequency with which the control is performed (e.g., annual, monthly, weekly, daily, recurring). Note: Frequency
with which control is performed, number of individuals performing control and number of locations where control is
performed must be considered as these factors determine sample sizes to be selected for testing.
14 Testing Period Identify the timeframe for selecting transactions for control tests (e.g., all disbursements from October 1, XXX1 to March
31, XXX2).
15 Test Method Document the test method(s), to be used to execute control test The four types of tests are: Inquiry, Observation,
Examination, and Reperformance.
Note: Detailed explanation of each of the test types can be found in Section 3.E of the FIAR Guidance.
16 Transaction Document the transaction universe (i.e., all civilian payroll payments made between October 1, XXX1 and December 31,
Universe and XXX1) and reconcile the sum of the individual transaction balances (i.e. population) to the general ledger (or equivalent).
Reconciliation Note: The transaction universe is any entire collection of transactions or other whole set of items for a given period of
time from which we wish to draw conclusions, and from which the sample will be drawn.
17 Sampling Document the method used to select the sample.
Technique Note: The FIAR Guidance requires random sampling for tests of controls.
18 Sample Size and Document the sample size, and describe rationale for sample size selected.
Basis Note: Guidance for determining sample sizes can be found in Section 3.E of the FIAR Guidance.
19 Acceptable Document the acceptable number of deviations (i.e., how many exceptions are allowed before control fails the test?)
Number of Note: Guidance for determining acceptable number of deviations can be found in Section 3.E of the FIAR Guidance.
Deviations

Template Instructions 1.3.3, 1.3.4, 1.3.5 (Reporting Entity)/1.5.3, 1.5.4, 1.5.5 (Service Provider) Work Product-Test Plan, Test Results, and Summarized Test
Results 3
 TEMPLATE INSTRUCTIONS

20 Location of Testing Note the location where the test will be performed (e.g., Reporting Entity Headquarters, DFAS Cleveland, etc.)

21 Test Description Provide a summary of the test.

Note: The test should be designed to ensure that the test objectives (Item 11 above) are satisfied
Example: Verify that the Fund Balance with Treasury Reconciliation has been completed and reviewed and all reconciling
items have been researched and corrected by examining 3 months of FBWT Reconciliation documents for evidence of
timely completion, preparer and supervisory review and approval, and timely and accurate resolution of reconciling
items.

22 Test Procedures Explain the test procedures in detail. List each step to be performed to ensure that the test objective is achieved. Identify
and Testing the testing attribute(s), or element(s) or feature(s) of control activity that the control test is seeking to validate.
Attributes Example: For each monthly FBWT Reconciliation document selected, examine the reconciliation and all associated
documentation (JV forms, etc.) to ensure that:
Attribute 1. Reconciliation was performed timely (month end- or within 5 business days thereafter)
Attribute 2. Signature and date of preparer exists to evidence performance of reconciliation.
Attribute 3. Reconciliation identified errors/exceptions
Attribute 4. Errors were researched and corrected through appropriate adjusting entries
Attribute 5. Documentation exists to support resolution of errors
Attribute 6. Reconciliation is reviewed by appropriate personnel (supervisor) and evidence exists to support review

23 Test Results Describe the results of the test work performed (see test work table below). Document the number of sample items
where at least one attribute was not met and also describe the number of errors associated with each attribute (e.g.,
noted that for 17 out of 45 sample items, there was at least one error. Specifically, we noted that for 10 of the 45 sample
items, the reconciliations were not completed timely (Attribute 1) and for 12 of the sample items, there was evidence of
supervisory review (Attribute 6).)

Evaluation of Test Results

24 Control Based on the results of testing, state whether the control activity is (is not) operating effectively to mitigate the key risk of
Effectiveness material misstatement and achieve the financial reporting objective. The control activity is deemed not to be operating
Conclusion effectively, if the number of exceptions (e.g., number of samples that had at least one error) exceed the maximum
number of errors listed in the FIAR Guidance.

25 Tester's Signature Print the form, and have the tester sign and date this block attesting to the accuracy of the test plan. Note: Electronic
& Date signature is acceptable as well (e.g., "/s/ John Smith")

26 Supervisor's Print the form, and have the tester's supervisor sign and date this block to indicate his review and acceptance of the test
Signature of plan and documented test results. Note: Electronic signature is acceptable as well (e.g., "/s/ John Smith")
Acceptance & Date

Template Instructions 1.3.3, 1.3.4, 1.3.5 (Reporting Entity)/1.5.3, 1.5.4, 1.5.5 (Service Provider) Work Product-Test Plan, Test Results, and Summarized Test
Results 4
 EXAMPLE

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
1 DoD Entity DFAS Columbus (CO) 4 Preparer John Smith
2 Financial Statement Line Gross Outlays - Statement of Budgetary 5 Preparer's XXX-XXX-XXXX
Item(s) Resources Phone #
3 Business Cycle(s)/Assessable Procure to Pay/Vendor Pay/Disbursing 6 Documentation DFAS CO - Audit
Unit/Sub-Assessable units Location Readiness Office
7 Financial Statement Valuation/Accuracy, Existence, Rights and Obligations
Assertion(s)
8 Key Risk(s) of Material 1. Recorded outlays are for invalid or unauthorized transactions and/or are not
Misstatement (ROMM) supported by disbursement evidence (SBR Wave 2, ROMM #10)
3. Outlays and adjustments are reported at incorrect amounts (SBR Wave 2, ROMM #36)

9 Financial Reporting 1. Outlays represent valid, authorized transactions and pertain to the entity (SBR Wave
Objective(s) 2, FRO #55)
(FROs) 2. Outlays are recorded at the correct amounts (SBR Wave 2, FRO #58)
3. Outlays are recorded in the proper period (SBR Wave 2, FRO #60)
4. Outlays are in an amount not exceeding the obligation, authorizing the outlay (SBR
Wave 2, FRO #62)

10 Control Activity Description
Multiple times per day, the Disbursement Officer (Certification Section) reviews the
Disbursement Voucher (prepared by the Accounting Technician) and supporting
payment documents (Invoice, Receiving Report and Obligating document) for
appropriateness and accuracy by agreeing the information in the invoice against the
same fields in the Receiving Report and original Obligating document prior to certifying
the voucher for payment. He documents his review and approval by signing and dating
the voucher.

11 Test Objective(s) To verify that the Disbursement Officer reviewed the Disbursement Voucher and
supporting payment documents to ensure that the documentation exists, is sufficient,
and supports the validity and accuracy of the payment made. The test will also verify
whether documentary evidence exists to support his review and approval (i.e., signature
and date on payment voucher).

12 Control Type Manual, dependent on system generated information

13 Control Frequency Recurring
14 Testing Period October 1, 2011 to March 31, 2012
15 Test Method Reperformance
16 Transaction Universe and We extracted a listing of all vendor payments made between October 1, 2011 and
Reconciliation March 31, 2012 from the Disbursement system. We reconciled the sum of these
transactions (disbursements) to the general ledger balance for account 1010.16 (GL sub-
account for recording all vendor payments). There were a total of 8,356 vendor
payments recorded during the testing period.

17 Sampling Technique
18 Sample Size and Basis
In accordance with sampling guidance prescribed by the April 2015 FIAR Guidance, we
chose random sampling as our sampling technique, and selected a simple random
sample using Microsoft Excel.
Considering the frequency of the control execution (multiple times per day) and the
number of locations subjected to the sample (1- DFAS Columbus), we determined that a
sample size of 45 is adequate to determine the operating effectiveness of the control.
The sample size is consistent with the Department's sample size guidance as prescribed
in the April 2015 FIAR Guidance.

Example Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider) 5
 EXAMPLE

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
19 Acceptable Number of For audit readiness purposes, for a recurring control activity, or one that occurs multiple
Deviations/Tolerable times per day, the Department is willing to accept 5 deviations and still render the
Misstatement control effective.
20 Location of Testing DFAS Columbus (CO)
21 Test Description Examine a sample of recorded payments to ensure that evidence exists to support the
Disbursing Officer's review and approval of the disbursement voucher and payment
package, and that sufficient, accurate and relevant documentation exists to support the
validity of the disbursement made.

22 Test Procedures and Testing Test a sample of 45 recorded vendor payments. For each of the selected sample item:
Attributes
Attribute A. Verify that an invoice exists to support the payment made.
Attribute B. Verify that a receiving report exists to support the payment made.
Attribute C. Verify that the original obligating document (purchase order or contract)
exists to support the payment made.
Attribute D. Verify that details of disbursement voucher agrees to information in
payment voucher documents, and that recorded payment amount is supported by these
documents.
Attribute E. Verify that disbursement voucher and supporting payment documentation
was properly reviewed and approved by the Disbursement Officer, and documented
evidence exists to support his review and approval (i.e., signature and date on
disbursement voucher).

23 Test Results Of the 45 sample payments tested we noted the following We noted that for 20 out of
45 sample items, there was at least one error. Specifically, we noted the following
1. For 17 of the 45 sampled items, there was no invoice (Attribute A) or receiving report
(Attribute B) or original obligation document (Attribute C) to support the recorded
payment, nor was their evidence of the Disbursing Officer's review and approval of the
payment (. Since documents to support these 17 payments did not exist, we were
unable to verify the accuracy and validity of the recorded payment amount (Attribute
D). Also, there was no evidence to support the Disbursing Officer's review and approval
of these payments (Attribute E).

2. For 20 of the 45 sampled items, an invoice (Attribute A), receiving report (Attribute
B), and original obligating document (Attribute C) existed, and the documents supported
the recorded payment amount (Attribute D); however, there was no evidence of the
review and approval of the payment package (Attribute E)

Note: Please see the Test Work Table (on the spreadsheet titled "SBR Test Plan - Results
- EX #1") for summarized test detail results.

Evaluation of Test Results

Example Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider) 6
 EXAMPLE

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
24 Control Effectiveness Our test work noted that there were 20 sample items (of the total 45 selected) that
Conclusion failed one or more of the testing attributes above. Since 20 exceptions exceeds the
Department's minimum acceptable deviation threshold of 5 allowable exceptions, we
conclude that the control over the review of the Disbursement Voucher and Payment
Package was not operating effectively during the period October 1, 2011 to March 31,
2012.

25 Tester's Signature & Date /s/ John Smith

April 28, XXX2
26 Supervisor's Signature of /s/ Brian Reed
Acceptance & Date April 30, XXX2

Example Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider) 7
 EXAMPLE

Test Plan - Test Work Table

Recorded Testing Attributes

Payment Sample Pass
Sample # Payment ID # Amount A B C D E or Fail Description of Deviation
1 WZ311990 $8,922.00 0 0 0 0 1 Fail No evidence of review/approval of payment
2 JK4901136 $149,245.73 0 0 0 0 1 Fail No evidence of review/approval of payment
3 VC9000011 $44,998.13 0 0 0 0 1 Fail No evidence of review/approval of payment
4 NU8745672 $18,654.00 0 0 0 0 0 Pass
5 BO1187302 $132,987.45 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
6 YH8765012 $769.98 0 0 0 0 1 Fail No evidence of review/approval of payment
7 CS7600011 $67,843.22 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
8 WZ311990 $8,922.00 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
9 JK4901136 $149,245.73 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
10 VC9000011 $44,998.13 0 0 0 0 1 Fail No evidence of review/approval of payment
11 NU8745672 $18,654.00 0 0 0 0 1 Fail No evidence of review/approval of payment
12 BO1187302 $132,987.45 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
13 YH8765012 $256.35 0 0 0 0 0 Pass
14 CS7600011 $4,563.22 0 0 0 0 1 Fail No evidence of review/approval of payment
15 WZ311990 $10,236.22 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
16 JK4901136 $105,232.22 0 0 0 0 1 Fail No evidence of review/approval of payment
17 VC9000011 $45,123.55 0 0 0 0 1 Fail No evidence of review/approval of payment
18 NU8745672 $7,822.10 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
19 BO1187302 $456.32 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
20 YH8765012 $15,236.22 0 0 0 0 1 Fail No evidence of review/approval of payment
21 CS7600011 $47,298.56 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
22 WZ311990 $45,632.11 0 0 0 0 0 Pass
23 JK4901136 $149,245.73 0 0 0 0 1 Fail No evidence of review/approval of payment
24 VC9000011 $44,998.13 0 0 0 0 1 Fail No evidence of review/approval of payment
25 NU8745672 $18,654.00 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
26 BO1187302 $132,987.45 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
27 YH8765012 $769.98 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
28 CS7600011 $122,444.33 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
29 WZ311990 $8,922.00 0 0 0 0 0 Pass
30 JK4901136 $149,245.73 0 0 0 0 1 Fail No evidence of review/approval of payment
31 VC9000011 $44,998.13 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
32 NU8745672 $18,654.00 0 0 0 0 1 Fail No evidence of review/approval of payment
33 BO1187302 $132,987.45 0 0 0 0 1 Fail No evidence of review/approval of payment
34 YH8765012 $769.98 0 0 0 0 1 Fail No evidence of review/approval of payment
35 CS7600011 $67,843.22 0 0 0 0 0 Pass
36 WZ311990 $8,922.00 0 0 0 0 0 Pass
37 JK4901136 $149,245.73 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
38 V69000011 $56,322.12 0 0 0 0 0 Pass
39 VC9000012 $2,563.88 0 0 0 0 1 Fail No evidence of review/approval of payment
40 VC9090013 $856.14 0 0 0 0 1 Fail No evidence of review/approval of payment
41 VC9000014 $26,356.89 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
42 NU8745672 $1,200.00 0 0 0 0 1 Fail No evidence of review/approval of payment
43 BO1187302 $879.29 0 0 0 0 1 Fail No evidence of review/approval of payment
44 YH8765012 $45,888.36 1 1 1 1 1 Fail No supporting documentation/no evidence of review/approval
45 CS7600011 $365,255.00 0 0 0 0 0 Pass
Total Sample Failures: 17 17 17 17 37

Tick Mark Legend

0 No Exception Noted
1 Exception Noted

Example Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider) 7
 EXAMPLE

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
1 DoD Entity
2 Financial Statement Line
Item(s)
3 Business Cycle(s)/Assessable
Unit/Sub-Assessable Units
7 Financial Statement
Assertion(s)
8 Key Risk(s) of Material
Misstatement (ROMM)
DoD Component - Base # 1 4 Preparer Dave Smith
Property, Plant and Equipment - Balance Sheet 5 Preparer's XXX-XXX-XXXX
Phone #
Acquire to Retire/Property, Plant, and 6 Documentation DoD Component -
Equipment/General Equipment (GE) Location Base #1
Existence and Completeness
1. Recorded assets do not exist at a given date (E&C ROMM # 3)
2. Assets of the reporting entity exist but are omitted from the APSR and/or summary
schedules (E&C ROMM # 7)

9 Financial Reporting 1. Recorded assets exist at a given date (E&C FRO # 3)

Objective(s) 2. All existing assets, as of the reporting date, including property in the custody of third
(FROs) parties, are included in the general ledger (E&C FRO #6)

10 Control Activity Description
Annually, the Accountable Property Officer (APO) provides a listing of General
Equipment (GE) assets (that has been reconciled to the APSR and financial statements)
to the Property Custodians at the installation. The APO provides comprehensive
instructions for conducting the counts. The "DD Form ABC" has all the key financial
management data fields (i.e., serial number, barcode, description of item, warehouse
location) for each item to be inventoried.
The Property Custodians locates each item on "DD Form ABC". As part of the inventory,
the Property Custodians verify the existence, location, and condition of all GE items,
confirming these items by initialing and dating the appropriate space on DD Form ABC.
In addition, Property Custodians then look for items that are at the installation facility,
but are not listed in Form ABC -- these items are reviewed to determine whether they
should included in the GE Asset listing or not. The Property Custodian documents any
required adjustment (e.g., item on Form ABC but does not exist, item at installation
warehouse but not Form ABC). The Property Custodian signs and dates "DD Form ABC,"
indicating that he/she conducted the inventory procedures accurately.
The Property Custodian's Supervisor verifies the accuracy of the inventory by randomly
selecting items verified by the Property Custodian on "DD Form ABC." The Supervisor
also reviews and either approves or rejects all proposed adjustments to property
records. Upon verification of the GE and review of adjustments, the Supervisor signs
and dates the appropriate section on "DD Form ABC."

11 Test Objective(s) To determine whether the annual inventory count sheets, indicating completion of
inventory counts, are prepared timely and evidence of Supervisory review exists to
demonstrate accuracy of the recorded items.
12 Control Type Manual - Dependent on System Generated Information
13 Control Frequency Annual (1 Time per Year) -- at 12 locations; 12 completed count sheets.
14 Testing Period October 1, 2011 to September 30, 2012
15 Test Method Reperformance

Example 1.3.3, 1.3.4, 1.3.5 (Reporting Entity)/1.5.3, 1.5.4, 1.5.5 (Service Provider) Work Product-Test Plan, Test Results, and Summarized8
Test Results

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
16 Transaction Universe and
Reconciliation
17 Sampling Technique
18 Sample Size and Basis
19 Acceptable Number of
Deviations/Tolerable
Misstatement
20 Location of Testing
21 Test Description
Example 1.3.3, 1.3.4, 1.3.5 (Reporting Entity)/1.5.3, 1.5.4, 1.5.5 (Service Provider) Work Product-Test Plan, Test Results, and Summarized9
Test Results
EXAMPLE
Considering that the control activity is performed once per year at 12 different
warehouse locations, our population of inventory counts to conduct the test of control
is 12 locations. We randomly selected 3 warehouse locations at which to observe the
count being performed and examine related documentation to support existence and
completeness of assets. In addition, we randomly selected 45 of the assets that were
counted at each warehouse (Note: there are thousand of assets stored at each
warehouse location) to verify whether they exist and are recorded in the APSR
completely and accurately.
In accordance with sampling guidance prescribed by the April 2015 FIAR Guidance, we
chose random sampling as our sampling technique, and selected a simple random
sample using Microsoft Excel.
Our total sample size is 3, since we chose three locations at which to perform testing.
Within each of these locations, we chose a random sample of 45 asset items that were
counted at each warehouse (Note: there are thousands of assets stored at each
warehouse) (See #16 above)
Our total population of inventory counts to test was 12 since the control operates at 12
warehouse locations. Based on the Department's sampling guidance, we randomly
chose three warehouse locations to conduct our control test. The acceptable number of
deviations for a sample size of three is 0.
DoD Component - Base # 1, 6, and 9
For the three locations selected for testing, verify the following:
A. The Property Custodians signed and dated the DD Form ABC, confirming that they
performed the asset counts to verify the existence and completeness of asset items.
B. The Supervisor reviewed and approved the inventory count performed, as well as any
proposed adjustments, and documented his review/approval by signing/dating DD Form
ABC.
C. Select 45 assets from the APSR at each of the three warehouse locations and verify
that the assets exist. If they do not exist, confirm that the items were appropriately
transferred or disposed, and that sufficient documentation exists to support their
transfer/disposal.
D. Select 45 asset items on the floor of each of the three warehouse locations selected
for testing and verify that the assets are recorded in the APSR and GL. For assets not
recorded in APSR and GL, ensure that the Property Custodians researched reason for
omission and proposed appropriate adjusting entries.
 EXAMPLE

Test Plan - Control Background, Test Procedures, Test Results, and Evaluation
22 Test Procedures and Testing
Attributes
Physically observer GE asset counts being performed and examine documentation to
ensure that:
Attribute A. Physically inventory count was conducted at fiscal year end, or shortly
thereafter (Within 10 business days of the end of the fiscal year). Property custodians
signed and dated the DD Form ABC, confirming that they performed the asset counts to
verify the existence and completeness of asset items.
Attribute B. Evidence exists to support warehouse supervisor's review and approval of
inventory count and supporting adjusting entries to property records (i.e., initials and
date on Form 85A)
Attribute C. All 45 assets selected from the APSR for testing exist at the warehouse . In
cases where they do not exist, they have been appropriately transferred or disposed,
and sufficient documentation exists to support their transfer/disposal (Existence).
Attribute D. All 45 assets selected from the warehouse are appropriately entered in the
APSR and GL. In cases where they are not entered, the appropriate adjustment is made.

23 Test Results We noted that:

1. At two of the warehouse locations, there was no evidence (Signed and dated DD
Form ABC) to support the Warehouse supervisor's review and approval of inventory
count and supporting adjusting entries to property records (Attribute B)
2. At all three warehouse locations sampled, the physical inventory counts were
conducted timely and there was a signed and dated DD Form ABC to evidence the
performance of the counts by the Property Custodians (Attribute A)
3. At all three warehouse locations sampled, all 45 assets selected for testing physically
existed at the warehouse, and if they did not exist, sufficient documentation was readily
available to support their transfer/disposal (Attribute C).
4. At all three warehouse locations sampled, all 45 assets selected from the warehouse
for testing were appropriately entered in the APSR, and in cases where they were not
entered, the appropriate adjustment was made (Attribute D)

Evaluation of Test Results

24 Control Effectiveness Based on the test results, we conclude that the physical inventory count control was not
Conclusion operating effectively to ensure the existence and completeness of assets.

25 Tester's Signature & Date /s/ Dave Smith

October 10, 2012
26 Supervisor's Signature of /s/ Frank Doe
Acceptance & Date October 10, 2012

Example 1.3.3, 1.3.4, 1.3.5 (Reporting Entity)/1.5.3, 1.5.4, 1.5.5 (Service Provider) Work Product-Test Plan, Test Results, and Summarized
10
Test Results
 EXAMPLE

Test Plan - Test Work Table

Testing
Attributes
Sample
Sample # Warehouse Location Assets Counted A B C D Pass or Fail Description of Deviation
1 RE Base 1 45 0 1 0 0 Fail No evidence of review by Supervisor
2 RE Base 2 45 0 0 0 0 Pass
3 RE Base 3 45 0 1 0 0 Fail No evidence of review by Supervisor
Total Sample Failures: 0 2 0 0

Tick Mark Legend

0 No Exception Noted
1 Exception Noted

Example Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service 11
Provider)