Reviewing the statement of financial position
What a reviewer should check on a client's statement of financial position, and how each figure can be traced back to the mapped trial balance.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Ask an experienced reviewer where to start with a draft set and many will say the balance sheet. The statement of financial position is where mapping errors surface first, because a wrong line in the income statement usually just shifts a subtotal, while a wrong line in the balance sheet changes a classification readers rely on: current or non-current, receivable or payable, debt or equity.
This article sets out why the balance sheet deserves that priority, how to trace each figure back to the trial balance in Achekam, the classification questions to ask, what the automated checks cover and what they leave to you.
Why the balance sheet is where mapping errors surface first
Balance sheet accounts carry balances that build up over years, and their names drift. "Loan - J Smith" might be a director, a customer or an employee. A suspense account can be an asset one month and a liability the next. A VAT control account changes sides. A mapping that was right last year can be wrong this year without anybody touching it.
Achekam's suggestions for each trial balance account come from the file's own mapping column, earlier mappings, AI or keyword rules, and none of them is an approved mapping until a person approves it. When the Studio builds a draft, AI suggestions with a confidence of 0.5 or more are placed in it at once and listed as proposals for someone to accept, move or set aside. Balance sheet accounts with ambiguous names are exactly where those proposals need a reviewer's eye, as clearing AI mapping proposals before signing explains.
Tracing each line back to the mapped trial balance accounts
Every figure in the draft is calculated in code from the mapped trial balance, which makes tracing simple in principle: each line is the sum of the accounts mapped to it. The mapping workbench, under the Studio's Canvas > "Mapping", shows each account's line and note and lets staff move accounts by hand. The menu entry "Trial Balance & Source Mapping" leads to the Source Room rather than the workbench, so go in through the Canvas.
For each line on the balance sheet:
- List the accounts mapped to it.
- Check that each belongs there by its nature, not its name.
- Check the sign: a debit balance on a payables line, or a credit balance among receivables, needs explaining.
- Agree significant balances to evidence outside the ledger: bank confirmations, loan statements, the asset register, the stock count.
Where a line combines things readers need to see separately, such as a material loan to a director inside other receivables, a firm can add its own statement lines and groups; each custom line still totals into a standard line, so the notes and the cash flow stay consistent.
Current or non-current: the classification questions a reviewer asks
Classification is where balance sheet reviews earn their keep. The questions to ask:
- Loans payable. Is any part repayable within twelve months? Has a covenant been breached that makes the whole loan repayable on demand at year end?
- Owner loans. Are there written terms? Without them, a loan from a director is generally repayable on demand, and so current.
- Receivables. Are any amounts not expected within the normal operating cycle or twelve months, such as a long-term loan to a related company?
- Deposits and advance receipts. Are customer deposits shown as liabilities until earned?
- Tax. Are current and deferred tax shown separately, and is deferred tax non-current?
- Equity. Are amounts described as capital really share capital, or owner loans that belong in liabilities?
The ACCA's article on the audit of assertions explains the financial statement assertions identified in ISA 315 (Revised 2019) and how procedures are designed to test them. Even outside an audit, existence, completeness, rights and obligations and classification make a useful frame for a balance sheet review.
Checks the code runs and the ones a person must still make
Achekam runs two kinds of check on a draft. The Validation & Math Engine runs fixed, non-AI checks such as double entry and note ties. Separately, staff can run an automated review that lists findings for a person to accept, resolve or dismiss. Both are advice; neither blocks signing.
What those checks cannot know:
- whether an account sits on the right line by its substance;
- whether a liability is current under an agreement the system has never seen;
- whether a balance exists at all;
- whether a disclosure the line needs, such as security over assets, has been made.
Those are the reviewer's job. Each set names a preparer, a reviewer and an engagement partner, and the person recorded as preparer or reviewer cannot issue the set, which puts the reviewer's role on the record.
A short reviewer's checklist for the statement
- Every AI mapping proposal on a balance sheet account has been accepted, moved or set aside.
- Every line has been traced to its accounts, and every account's nature confirmed.
- Unusual signs are explained.
- The current and non-current split rests on terms, not habit.
- Owner and related-party balances are shown separately and cross-referenced to the related-party note.
- Significant balances are agreed to outside evidence.
- Equity agrees to the statement of changes in equity.
- Validation and automated review findings are resolved, or dismissed with a reason.
A balance sheet that passes this list is one the partner can sign with confidence. How the draft is built in the first place is covered in building draft statements from a mapped trial balance, and the automated checks in validation and automated review.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
