Balance-Related Audit Objectives

Existence

The assets and liabilities on the balance sheet are really there at the balance sheet date.

“Is it really there?”

Completeness

Every asset and liability that exists is included in the balance, along with the disclosures that go with it.

“Is everything included?”

Accuracy

Each item in the balance is recorded at the right dollar amount, and the related disclosures get the numbers right.

“Is it the right amount(s)?”

Cutoff

Transactions near year end land in the right period, not pushed into next year or pulled into the current year.

“Is it in the right period?”

Detail Tie-in

The detail behind the balance adds up correctly and agrees with the general ledger.

“Do the details add up to the general ledger?”

Realizable Value

Assets are reported at no more than the company expects to actually collect or recover.

“Will we actually collect it?”

Classification

Each item in the balance sits in the right account.

“Is it the right account?”

Rights and Obligations

The company owns or controls the assets it reports, and the liabilities it reports are its own.

“Does the company own it or owe anything?”

Presentation

Balances are combined or broken out in a sensible way and labeled clearly, and the related disclosures help a reader follow them.

“Are they shown and disclosed clearly?”

What tests does the auditor perform for any balance-related audit objective?

substantive analytical procedures and tests of details of balances

Which balance-related audit objectives fall under the “valuation or allocation” assertion?

accuracy, cutoff, detail tie-in, and realizable value