The existence assertion, rights and obligation assertion, and completeness assertion are three key components of the financial statement assertions, which are essential in conducting audits and evaluating the accuracy and reliability of financial statements.
1. Existence assertion: This assertion states that the assets, liabilities, and equity balances reported in the financial statements actually exist at a given date. It verifies the physical existence of assets and liabilities, such as verifying the existence of inventory or confirming the existence of a bank account.
2. Rights and obligation assertion: This assertion ensures that the entity has legal rights to the assets it reports and that the reported liabilities are valid obligations of the company. It confirms that the assets are owned or controlled by the entity and that the reported liabilities represent legitimate obligations that the entity is liable to pay.
3. Completeness assertion: The completeness assertion ensures that all transactions and accounts that should be included in the financial statements are actually included. It verifies that nothing significant has been omitted, and that all relevant information has been recorded and presented in the financial statements. This assertion is crucial to ensure that the financial statements are not misleading due to the absence of important information.
These assertions, along with others such as valuation, accuracy, and presentation and disclosure, are used by auditors to evaluate the reliability of financial statements to provide reasonable assurance to users of the financial statements.
What is the existance assertion? The rights and obligation assertion? The completeness assertion?
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