ACCA AAA ^INT Syllabus D. Audit of Historical Financial Information - The Assertions Explained - Notes ^{1 / 9}

The assertions help assess risks

They help the auditor consider potential misstatements and so design audit procedures for those particular risks.

The 3 types of figure in the financial statements are:

1. Transactions and Events:  

   In general this refers to income statement figures, but will include events such as the purchase of a non current assets.

2. Account Balances at the Year End:  

   These will be the items on the statement of financial position.

3. Presentation and Disclosure:  

   This is how the financial statements are presented and how items have been disclosed.

Different assertions apply to each of these three areas of the financial statements.

Transactions and Events - Assertions

1. Occurrence: 

   Transactions and events that have been recorded have occurred and pertain to the entity.

2. Completeness:

   All transactions and events that should have been recorded have been recorded.

3. Accuracy: 

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

4. Cut-off: 

   Transactions and events have been recorded in the correct accounting period.

5. Classification: 

   Transactions and events have been recorded in the proper accounts.

Y/E Balances Assertions

1. Existence: 

   Assets, liabilities and equity interests exist.

2. Rights and Obligations: 

   The entity holds or controls the rights to assets, and liabilities are the obligations of the entity.

3. Completeness: 

   All 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.

Presentation and Disclosure - Assertions

1. Occurrence and rights and obligations: 

   Disclosed events, transactions and other matters have occurred and pertain to the entity.

2. Completeness: 

   All disclosures that should have been disclosed in the financial statements have been included.

3. Classification and understandability: 

   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.