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Understanding Audit Assertions

Audit assertions are management representations in financial statements that auditors use to form opinions. They are categorized into two types: class of transaction assertions and account balance assertions, each with specific criteria such as occurrence, completeness, and accuracy. These assertions ensure that financial information is recorded correctly and presented clearly.

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16 views5 pages

Understanding Audit Assertions

Audit assertions are management representations in financial statements that auditors use to form opinions. They are categorized into two types: class of transaction assertions and account balance assertions, each with specific criteria such as occurrence, completeness, and accuracy. These assertions ensure that financial information is recorded correctly and presented clearly.

Uploaded by

bingeman642
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Audit Assertions

Assertions
 Assertions are representation by management
embodied in financial statements used by the
auditor to form an opinion.

 Two types:

1. Class of transaction assertions & Related


Disclosures

2. Account Balance assertions & Related


Disclosures
Class of Transaction Assertions
Occurrence Transactions and events that have
been recorded have occurred and
pertain to the entity

Completeness All transactions and events that


should have been recorded have
been recorded.
Accuracy Amounts and other data relating to
recorded transactions and events
have been recorded appropriately.

Cut Off Transactions and events have been


recorded in the correct
accounting period.

Classification Transactions and events have been


recorded in the proper accounts

Presentation Related disclosures are relevant and


understandable.
Account Balance Assertions
Existence Assets, liabilities and equity exist.

Rights and obligations The entity holds the right to assets and
liabilities are obligations of the entity.

Completeness Assets, liabilities and equity that should


have been recorded have been recorded.

Valuation ,allocation & accuracy Assets, liabilities and equity have been
appropriately recorded.

Classification Assets, liabilities and equity interests have


been recorded in the proper accounts (e.g.
fixed assets as non-current assets
and not expenses).

Presentation • Assets, liabilities and equity interests


are appropriately aggregated and
disaggregated and clearly described
• (E.g. current liabilities are reported
separately from non‑current liabilities).
• Related disclosures are relevant and
understandable.
The End

Thank You

Happy Learning

All the Best

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