The major financial statement assertions, also known as management assertions, are the set of principles that auditors use to evaluate the reasonableness of the financial statements. These assertions help auditors assess the accuracy, completeness, and validity of the financial information presented.
The assertions about account balance at the period end are related specifically to the balance sheet and include the following:
1. Existence: This assertion states that all assets, liabilities, and equity balances presented in the financial statements actually exist and are valid at the period end.
2. Rights and Obligations: This assertion ensures that the company has legal ownership or rights over the assets presented on the balance sheet, and that the liabilities represent the company's obligations to pay.
3. Completeness: This assertion states that all relevant and material account balances are included in the financial statements, ensuring that nothing significant is omitted or hidden.
4. Valuation and Allocation: This assertion focuses on the appropriate valuation of assets, liabilities, and equity balances, making sure they are recorded at their fair value and allocated correctly within the financial statements.
5. Accuracy: This assertion relates to the accuracy of the account balances, ensuring that they are calculated correctly and free from material misstatements.
6. Cut-off: This assertion ensures that transactions and events are recorded in the correct accounting period, and that there are no timing errors or misclassifications.
By evaluating these assertions, auditors can provide reasonable assurance about the reliability of the financial statements, giving users confidence in the information presented.
List the major financial statement assertions. Define the assertions about account balance at the period end.
1 answer
1 answer