Audit Training Program: Understanding Assertions in Financial Statements, Lecture notes of Accounting

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Audit Training Program

Module - Assertions in

Financial Statements

Smart CA Series

SOARING HIGH

Soaring High Course Structure

 This is a set of Training modules that seeks to empower our article assistants and trainees in the work that they do.  This learning series is simple yet effective and seeks to impart deep knowledge in an easy to learn manner.

What is an Assertion

 Financial statement assertions are the set of information that the

preparer of financial statements is providing or stating to another

party.

 Assertions are representations of management that are embodied in

all financial statement components or classifications.

 Specific audit objectives are developed in each audit area to evaluate

the appropriateness and reasonableness of relevant financial

statement assertions.

What is an Assertion

True and Fair Completeness Occurrence Valuation Existence Rights & Obligations Disclosure & Presentation

Assertions for Account Balances at period end.

 EXISTENCE : Assets, liabilities and equity interests exist.

 RIGHTS AND OBLIGATIONS : The entity holds or controls the rights to assets,

and liabilities are the obligations of the entity.

 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.

Assertions for Account Balances at period end.

Occurrence Completen ess Accuracy Cut off Classificat ion Existence Rights & Obligations Valuation and allocation Fixed Assets Yes Yes Yes Yes Yes Investments Yes Yes Yes Yes Yes Inventories Yes Yes Yes Yes Yes Receivables & Revenue Yes Yes Yes Yes Yes Yes Yes Yes Cash and Bank Yes Yes Yes Yes Yes Loans and Advances Yes Yes Yes Yes Yes Yes Share Capital Yes Yes Yes Yes Yes Borrowings Yes Yes Yes Yes Yes Yes Expenses Liabilities Provisions Yes Yes Yes Yes Yes Yes Yes Yes

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