Question

An auditor is concerned about various assertions while obtaining audit evidence for conduct of an audit. What are those various assertions with respect to balance at the period end.

Answer 1

An auditor is concerned about various assertions while obtaining audit evidence for conduct of an audit. The following are they

I.            Assertion about the classes of transactions
1.       Occurrence
2.       Completeness
3.       Accuracy
4.       Cut-off
5.       Classification
II.            Assertion about account balances
1.       Existence - assets , Liabilities and Equity interest exist.
2.       Rights and obligations , (Rights in case of Assets and Obligations in case of Liability)- The entity holds or controls the assets and liabilities are the obligations of the entity.
3.       Completeness - All the assets , liabilities and equity interests that should have been recorded have been recorded.
4.       Valuation and allocation - assets , liabilities and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.
III.            Assertion about presentation/Disclosure
1.       Occurrence and rights and obligation - Disclosed events , transactions and other matters have occurred and pertain to the entity.
2.       Completeness - all disclosures that should have been included in the financial statements have been included .
3.       Classification - Financial Information is appropriately presented and described , and disclosures are clearly expressed.
4.       Accuracy and valuation - financial and other information are disclosed fairly and at appropriate amounts.

These are those various assertions with respect to balance at the period end.

I Assertion about account balances

1.       Existence - assets , Liabilities and Equity interest exist.

2.       Rights and obligations , (Rights in case of Assets and Obligations in case of Liability)- The entity holds or controls the assets and liabilities are the obligations of the entity.

3.       Completeness - All the assets , liabilities and equity interests that should have been recorded have been recorded.

4.       Valuation and allocation - assets , liabilities and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.

II.            Assertion about presentation/Disclosure

1.       Occurrence and rights and obligation - Disclosed events , transactions and other matters have occurred and pertain to the entity.

2.       Completeness - all disclosures that should have been included in the financial statements have been included .

3.       Classification - Financial Information is appropriately presented and described , and disclosures are clearly expressed.

4.       Accuracy and valuation - financial and other information are disclosed fairly and at appropriate amounts.