Financial audit, Auditing

Assignment Help:

In a financial audit, management assertions or financial statement assertions is the set of information that the preparer of financial statements (management) is providing to another party. Financial statements represent a very complex and interrelated set of assertions. At the most aggregate level, the financial statements include broad assertions such as "total liabilities as at 31 December are $50 million", "total revenue for the year is $9 million" and "net income for the year is $3 million".

Auditors decompose these broad assertions into a detailed set of statements referred to as management assertions, separated into three categories:

1. Transactions:

o Occurrence - the transactions actually took place

o Completeness - all transactions that should have been recorded have been recorded

o Accuracy - the transactions were recorded at the appropriate amounts

o Authorization - all transactions were properly authorized

o Cutoff - the transactions have been recorded in the correct accounting period

o Classification - the transactions have been recorded in the proper accounts

2. Accounts balances:

o Existence - assets, liabilities and equity balances exist

o Rights and Obligations - the entity holds or controls the rights to its assets and owes obligations to its liabilities

o Completeness - all assets, liabilities and equity balances that should have been recorded have been recorded

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

3. Presentation and disclosure:

o Occurrence - the transactions have occurred

o Rights and Obligations - the transactions pertained to the entity

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

o Classification and Understandability - financial statements are appropriately presented and described, and information in disclosures are clearly expressed.

o Accuracy and Valuation - financial and other information is disclosed fairly and at appropriate amounts.


Related Discussions:- Financial audit

Verification, discuss the verification procedure of current assets and long...

discuss the verification procedure of current assets and long term liabilties

Describe your role in managing a discrete assignment, Describe your role in...

Describe your role in managing a discrete assignmentn..

Auditors procedures - audit process, Auditors Procedures - Audit Process ...

Auditors Procedures - Audit Process The relevant authority on post balance sheet events is ISA. The preparation of loss and profit account and balance sheet will forever inclu

Limitation of audit evidence, Limitation of Audit Evidence The quantit...

Limitation of Audit Evidence The quantity and quality of evidence is constrained through the following factors as: Absolute proof is not possible; Some assert

Audit Plan for small service company, only needs to be 2 - 3 pages and I ne...

only needs to be 2 - 3 pages and I need help with an audit plan is to look like

Assertions about disclosure, Assertions about disclosure Assertions ...

Assertions about disclosure Assertions about disclosure and presentation : a) Rights and Occurrence and obligations -disclosed transactions and events and other issues

What is the first step in the formation of a corporation, Q. What is ordina...

Q. What is ordinarily the first step in the formation of a corporation? a. Development of by-laws for the corporation b. Issuance of the corporate charter c. Application for incorp

Involve people in audit, How to involve people in audit? Ans) Use audits...

How to involve people in audit? Ans) Use audits as opportunities to train others. Ask for a volunteer (who is not an auditor) to walk by the audit process with you as an assista

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd