Assertions are “Representation by the management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur.”
These assertions are discussed in ISA 315 and are of following categories:
1. Assertions about Classes of Transactions and Related Disclosures
a. Occurrence
This assertion shows that the transactions recorded and disclosed by the management were actually occurred and are related to the entity.
b. Completeness
Shows that there are no incomplete or un recorded transactions, events and disclosures. Every transaction or event related to the entity is disclosed and recorded.
c. Accuracy
Shows that the amount recorded and the event disclosed are appropriately measured and described.
d. Cut-off
Shows that the transactions and events recorded and disclosed are actually related to the correct accounting period.
e. Classification
Shows that the transactions recorded and disclosed are addressed in proper heads.
f. Presentation
Shows that Transactions and events are appropriately aggregated or disaggregated and clearly described and related disclosures are relevant and understandable.
2. Assertions about Account Balances and Related Disclosures
a. Existence
Shows that the assets, liabilities and equity of the company actually exists.
b. Rights and obligations
Shows that the assets disclosed by the entity are in the ownership of the entity and the liabilities are related to the entity.
c. Accuracy, valuation and allocation
Shows that assets, liabilities and equity are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded and related disclosures have been appropriately measured and described.
d. Classification
Shows that assets, liabilities and equity are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable.
e. Completeness
Shows that there are no unrecorded assets, liabilities and equity.
