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The 
profit or loss account 
is a record of income generated and expenditure incurred over a given period. 

 
The 
statement of financial position
is a list of all the assets owned by a business and all the liabilities 
owed by a business at a particular date. 

 
The 
statement of cash flows
shows sources of cash generated during a period and how these funds 
have been spent. 

 
Businesses will wish to prepare internal reports to help them run the day-to-day operations of the 
business. 

 
Key controls over payroll cover: 
– 
Documentation and authorisation of staff charges 
– 
Calculation of wages and salaries 
– 
Payment of wages and salaries 
– Authorisation 
of 
deductions 

 
The purchases and sales systems will be the most important components of most company accounting 
systems. 

 
The purchasing system tests will be based around: 
– Buying 
(authorisation) 
– 
Goods inwards (custody) 
– Accounting 
(recording) 

 
Like the purchase cycle, the sales system tests will be based around: 
– Selling 
(authorisation)
– 
Goods outwards (custody) 
– Accounting 
(recording) 

 
The tests of controls of the 
sales system
will be based around: 
– Selling 
(authorisation) 
– 
Goods outwards (custody) 
– Accounting 
(recording) 

 
Cash and petty cash must be regularly reconciled. 

 
Controls should be regularly checked and any problems reported to management. 

 
In 
many situations