Assertions definition

What are Assertions?

Assertions are the set of representations by a management team that were incorporated into the financial statements and accompanying disclosures that they produced. Auditors investigate the validity of these assertions as part of their audit procedures.

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Examples of Assertions

Examples of the assertions used in an audit are noted below.

Accuracy

Transactions have been recorded at their actual amounts.

Classification

Transactions have been appropriately presented within the financial statements and accompanying disclosures.

Completeness

All transactions that should have been included in the financial statements have actually been included. For example, the auditor might examine whether a transaction associated with the owner of a business is actually a personal transaction, as opposed to one that involves the business.

Cut-Off

Transactions have been recorded within the correct accounting period. For example, a transaction might have been recorded close to midnight at the end of the preceding reporting period. Should it be recorded in the preceding period or the current one?

Existence

Balance sheet items actually existed as of the balance sheet date.

Occurrence

The transactions summarized into the financial statements have actually occurred.

Valuation

All balance sheet items have been stated at their proper values.