Management Assertions

What is the “assertions to evidence” process?

Management assertions → Auditor’s objectives → Design a procedure → Gather evidence

Existence or Occurrence

Assets or liabilities of the company exist at a given date, and recorded transactions have occurred during a given period.

“Does it exist / did it occur?”

Completeness

All transactions and accounts that should be presented in the financial statements are also included.

“Nothing is missing?”

Valuation or Allocation

Asset, liability, equity, revenue, and expense components have been included in the financial statements at appropriate amounts.

“Are the amounts correct? Are they listed as the right account in the right period?”

Rights and Obligations

The company holds or controls rights to the assets, and liabilities are obligations of the company at a given date.

“Does the company own it? Do they owe anything?”

Presentation and Disclosure

The components of the financial statements are properly classified, described, and disclosed.

“Are the financial statement shown and explained clearly?”