lOMoARcPSD|11450120
Aue2602 Study
Summary Notes
Auditing Theory and Practice
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1
Assertions are categorized as follows:
• assertions about classes of transactions and events for period under audit e.g. sales, interest received
• assertions about account balances at year-end e.g., accounts receivable, property, plant and equipment
• assertions about presentation and disclosure e.g., notes that support Statement of Financial Position account
headings, contingent liabilities
Transactions and events: Account balances: Presentation & disclosure:
• Occurrence – have all • Existence – assets, • Occurrence and rights and
occurred and pertain to the liabilities and equity interest obligations – have occurred
entity exist and pertain to entity
• Completeness – anything • Rights and obligations – • Completeness – all has
that should have been entity holds and controls been included
recorded has been recorded rights to assets and • Classification &
• Accuracy - have been obligations are theirs understandability – is
recorded appropriately • Completeness – have all appropriately presented and
• Cut-off - have been been recorded described and disclosures
recorded in the correct • Valuation and allocation – are clearly expressed
accounting period included at appropriate • Accuracy and valuation –
• Classification - have been amounts and valuation or disclosed fairly & at
recorded in the correct allocation adjustments are appropriate amounts.
accounts recorded
Assertions for Statement of Financial Position transactions and balances :
Assertion Audit objective - to obtain satisfaction that :
Completeness individual transactions and balances in respect of specific kind of asset or liability are fully
accounted for in the accounting records and financials
Valuation & the balance for the specific asset or liability has been accounted for at the appropriate carrying
allocation value and that the transactions have been correctly allocated to the proper period and recorded
at the proper amount
Existence at a given date the asset or liability did exist and the transactions did take place during the
period in question
Rights & at a given date the asset or liability pertains to the entity and that the transactions did take
obligations place during the period in question
Presentation & the asset or liability was disclosed, classified and described in accordance with the applicable
disclosure legal requirements and generally accepted accounting practice
Assertions for Statement of Comprehensive Income transactions and balances :
Assertion Audit objective - to obtain satisfaction that the specific revenue or expenditure :
Completeness transactions and balances are fully accounted for in the accounting records and financial
statements
Occurrence • transactions actually took place during the period in question (occurrence)
• transactions pertain to the entity (validity)
Cut-off / accuracy / transactions are recorded in the proper period, are correctly allocated and are recorded at the
classification proper amount
Presentation & balances are disclosed, classified and described in accordance with the applicable legal
disclosure requirements and generally accepted accounting practice (ISA’s & 4th schedule)
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, lOMoARcPSD|11450120
2
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Aue2602 Study
Summary Notes
Auditing Theory and Practice
Downloaded by DJ poppy paps ()
,Downloaded by DJ poppy paps ()
, lOMoARcPSD|11450120
1
Assertions are categorized as follows:
• assertions about classes of transactions and events for period under audit e.g. sales, interest received
• assertions about account balances at year-end e.g., accounts receivable, property, plant and equipment
• assertions about presentation and disclosure e.g., notes that support Statement of Financial Position account
headings, contingent liabilities
Transactions and events: Account balances: Presentation & disclosure:
• Occurrence – have all • Existence – assets, • Occurrence and rights and
occurred and pertain to the liabilities and equity interest obligations – have occurred
entity exist and pertain to entity
• Completeness – anything • Rights and obligations – • Completeness – all has
that should have been entity holds and controls been included
recorded has been recorded rights to assets and • Classification &
• Accuracy - have been obligations are theirs understandability – is
recorded appropriately • Completeness – have all appropriately presented and
• Cut-off - have been been recorded described and disclosures
recorded in the correct • Valuation and allocation – are clearly expressed
accounting period included at appropriate • Accuracy and valuation –
• Classification - have been amounts and valuation or disclosed fairly & at
recorded in the correct allocation adjustments are appropriate amounts.
accounts recorded
Assertions for Statement of Financial Position transactions and balances :
Assertion Audit objective - to obtain satisfaction that :
Completeness individual transactions and balances in respect of specific kind of asset or liability are fully
accounted for in the accounting records and financials
Valuation & the balance for the specific asset or liability has been accounted for at the appropriate carrying
allocation value and that the transactions have been correctly allocated to the proper period and recorded
at the proper amount
Existence at a given date the asset or liability did exist and the transactions did take place during the
period in question
Rights & at a given date the asset or liability pertains to the entity and that the transactions did take
obligations place during the period in question
Presentation & the asset or liability was disclosed, classified and described in accordance with the applicable
disclosure legal requirements and generally accepted accounting practice
Assertions for Statement of Comprehensive Income transactions and balances :
Assertion Audit objective - to obtain satisfaction that the specific revenue or expenditure :
Completeness transactions and balances are fully accounted for in the accounting records and financial
statements
Occurrence • transactions actually took place during the period in question (occurrence)
• transactions pertain to the entity (validity)
Cut-off / accuracy / transactions are recorded in the proper period, are correctly allocated and are recorded at the
classification proper amount
Presentation & balances are disclosed, classified and described in accordance with the applicable legal
disclosure requirements and generally accepted accounting practice (ISA’s & 4th schedule)
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, lOMoARcPSD|11450120
2
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