Audit Assertions

Existence

assets and liabilities actually exist. ex : Accounts receivable = $1 million. Do these exist?

Occurrence

recorded transactions actually happened. ex:The company recorded a $100,000 sale. Did this sale actually happen?

Completeness

Everything that should have been recorded was recorded. Ex:Company reports $2 million of accounts payable.Are there unpaid bills that management failed to record?

Existence and Completeness Difference

Existence often worries about overstatement.

Completeness often worries about understatement.

Rights and Obligations

The company:actually owns the assets it reports, and actually owes the liabilities it reports. ex:Inventory physically exists. Does the company actually own it?

Valuation / Allocation

 Amounts are recorded at appropriate values according to GAAP.

Cutoff

 Transactions are recorded in the correct accounting period. Ex: Goods shipped January 2 are recorded as December 31 sales.That could improperly increase current-year revenue.

Accuracy

Transactions have been recorded at the correct amounts.Example: Invoice is $15,000 but accounting records show $150,000

Classification

:Transactions are recorded in the correct accounts.A long-term asset purchase should not be recorded entirely as an immediate operating expense.

Presentation and Disclosure

Items are appropriately:Presented,Classified,Described, Disclosed in the financial statements/footnotes.

Account → Relevant assertions → What could go wrong? → Audit procedure

Vouching

Related to Occurrence/Existence

Tracing

Related to Completeness

Recalculation

Related to Valuation/Accuracy

Bank deposits vs. receipts

Related to Bank deposits vs. receipts