Assertions and Audit Objectives

ASSERTIONS AND AUDIT
OBJECTIVES
Outcome Covered:
Know about the verification and
valuation of assets and liabilities that
should be observed in financial
statements.
Nature of Assertions
Financial statements are not statements of facts.

They are a collection of claims and assertions,
made implicitly or explicitly by the entity’s
management, about the recognition,
measurement, presentation, and disclosure of
information in the financial statements.
Meaning of Assertions:
 Management is responsible for the fair

presentation of financial statements. In
representing that the financial statements are
fairly presented in conformity with generally
accepted accounting principles.
 An assertion is a declaration or a positive
statement. In presenting their financial
statements, Management makes implicit
(General) or explicit (Specific) assertions
relating to account balances at year end
(account balances) about the information
presented.
 It is the auditor’s duty to conclude whether or not

the financial statements comply with assertions
established according to generally accepted
accounting principles.
For example,
1. The expression “inventory at cost of OMR 1000 in a
set of financial statements is in fact an assertion by
management that, inventory actually exists, that it is
owned by the entity at balance date, that it costs OMR
1000 and that is no other inventory. Financial
statements are considered reliable if they are, in all
material aspects, complete, valid and accurate.
By presenting the information of “Cash OMR.

25,000” in the financial statements, Management
may be making the following assertions:
A. The cash truly exists, and the company has
the right to use it (existence).
B. The amount presented represents all the
company’s cash (Completeness).
C. The amount presented is accurate
(Accuracy).
General assertions- Implicit
General assertions arise where management asserts that the
overall presentation and disclosure of financial statements:
1. Comply with the fundamental accounting concepts:
A. Going concern
B. Consistency
C. Matching
D. Prudency
2. Properly account for all material matters

3. Account for substance of Matters and not merely
their legal form.
4. Financial statements are based on appropriate,
generally accepted accounting their use, understanding
and interpretation.
General assertions- Implicit
5. Financial statements are adequately

informative about matters affecting their use,
understanding and interpretation.
6. Financial statements are classified,
summarized and presented in a reasonable
manner
7. Correctly reflect the results of operations and
financial position of the entity.
8. Comply with statutory requirements.
Specific assertions-Explicit
Specific assertions are explicit
representations by management that the
following critical audit objectives will be met
with regard to individually disclosed assets,
liabilities and transactions.
1. Existence
2. Right and obligations (ownership)
3. Occurrence (Validity)
4. Completeness (No unrecorded items)
5. Valuations
6. Measurement (Amount and period)
Specific assertions-Explicit
Assertions in financial information should be
evaluated when performing substantive
procedures and tests of control and at the
evaluation and conclusion stage of the audit.
Ordinarily, Audit evidence is obtained regarding
each financial statement assertion.
Levels of Assertions:
1. Financial statement level – Management

representation that the financial statements as a
whole are presented fairly, in all material respects,
in accordance with the applicable financial
reporting framework
For example, management asserts the financial
statements are free from material misstatements.
Levels of Assertions:
Account balance or class of transactions level –

Management representation that the underlying
account balances and class of transactions,
including related disclosures, are free of material
misstatements
For example, when considering the sales balance,
management is asserting that sales revenue is
complete (completeness assertion), the transactions
occurred (occurrence assertion), and transactions
have been appropriately recorded in the
accounting records (accuracy assertion).
Assertions May be relating to the way in
which financial statements information is
1. Recognized
2. Measured
3. Presented
4. Disclosed
Assertions about classes of transactions
and events for the period under audit:
a. Occurrence – recorded transactions and events have

occurred and pertain to the entity
b. Completeness – all transactions and events that
should have been recorded have been recorded
c. Accuracy – amounts and other data relating to
recorded transactions and events have been recorded
appropriately
d. Cutoff (proper period) – transactions and events have
been recorded in the correct accounting period
e. Classification – transactions have been recorded in
the proper accounts
Assertions about account balances at
the period end
a. Existence – assets, liabilities, and equity interests

exist
b. Rights and obligations – the entity holds or
controls the rights to assets, and liabilities are the
obligations of the entity
c. Completeness – all assets, liabilities and equity
interests that should have been recorded have been
recorded
d. Valuation and allocation – assets, liabilities, and
equity interests are included in the FS at appropriate
amounts and any resulting valuation or allocation
adjustments are appropriately recorded
Assertions about presentation and
disclosure
 a. Occurrence and rights and obligations – disclosed

events, transactions, and other matters have occurred
and pertain to the entity
 b. Completeness – all disclosures that should have been
included in the financial statements have been included
 c. Classification and understandability – financial
information is appropriately presented and described,
and disclosures are clearly expressed
 d. Accuracy and valuation – financial and other
information are disclosed fairly and at appropriate
amounts
Major Influences that Shape Our
Values are:
The Media/Internet: TV also affects our value it shows

viewers too often see people abusing and degrading other
people without any significant consequences.
Mainstream television, seen by a large number of young
viewers, continues to feature a great deal of violence and
antisocial behavior.

Assertions and Audit Objectives

Uploaded by

Copyright:

Available Formats

Assertions and Audit Objectives

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Assertions and Audit Objectives

Uploaded by

Copyright:

Available Formats

ASSERTIONS AND AUDIT

Financial statements are not statements of facts.

 Management is responsible for the fair

 It is the auditor’s duty to conclude whether or not

By presenting the information of “Cash OMR.

2. Properly account for all material matters

5. Financial statements are adequately

1. Financial statement level – Management

Account balance or class of transactions level –

a. Occurrence – recorded transactions and events have

a. Existence – assets, liabilities, and equity interests

 a. Occurrence and rights and obligations – disclosed

The Media/Internet: TV also affects our value it shows

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.