Page 230 - Manual Of SOP

Verification

should be traced through the general ledger and sub-ledgers. If
percentages of investments and holdings are not observable from the
ledgers, the company should be required to compute the percentage
for selected investments of interest.

(c) Verification of holdings and investments by reported affiliates is
generally more difficult because team members may not have that
company’s financial statement on record or the company may be
distant from the verification site. In these instances, team members
may use the respondent’s verified company data to check for sales,
expenses, charges or production activity between the two companies
or they may rely on faxed copies of source documents or require an
express delivery of the documents from the distant affiliate.
(d) It is compulsory and necessary for all entities to co-operate and be
willing to participate in the process of verification. In the case of
multiple producers in a group, the team may decide to undertake
plant verification of only one producer if there are no claimed
differences in the various plants.

Accounting Review
(xliii) The team must have a basic, but a very clear, understanding of the
respondent’s accounting system in order to adequately conduct a verification
of the facts as presented and to verify the gaps in the data. In the verification
agenda, the respondent should be asked to:
(a) Identify and describe the data systems used to record production and
sales data; and

(b) To review the manner in which source documents for production,
sales and expenses flow into the financial statements via accounting
vouchers, journals, subsidiary ledgers, and general ledger accounts.
If the respondent has not already done so, investigation team should
ask the respondent to provide a flow chart that clearly shows how
production costs, sales revenues, and sales expenses are tracked in
the respondent’s accounting system and identify the different stages
of each of these accounting records by the names actually used in
the respondent’s accounts with accurate translations. Furthermore,
since verification focuses on reconciling the various information with

207