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Dear Sir,
Can you tell me what is meant by Financial level and at assertion level?
I do get assertion means representation by management about the transaction in FS…. but what does it mean at Financial statment level?
Are responses for both different?
Regards
Assertions: ACCA COVER: accuracy, completeness etc. See OT notes
Financial statement level: all the assertions could be fine, but overall the FS give a misleading view. This is a higher level and more difficult to assess.
Therefore assertions are representations by management explicit or otherwise embodied in financial statements as used by the auditor to consider different types of potential misstatements.According to ISA 315 an auditor must use assertions for classes of transactions ,account balances ,presentation and disclosures to form the basis of assessment of risk of material misstatements.From here the auditor can now design and perform audit procedures or further procedures.Classes of transactions refers to profit or loss and account balances refer to SOFP. Assertions used include occurrence,completeness ,accuracy,cut-off ,classification,existence,valuation ,rights ad obligation.
Sir to my understanding whilst some of these assertions apply to classes of translations ,account balances and presentation and discourses some are precisely for specific categories I stated.correct me if I am right ?
Sir may i know what are the examples that the assertions are ok, but financial statement gives misleading way
It is quite difficult to give an example because a misstatement at the FS level is really an opinion that overall the FS to not give a true and fair view.
Perhaps one easy example is that there are going concern doubts. That does not relate to any balance or transaction that you could put your finger on, but if the going concern note were omitted then the FS could be misleading at a FS level.
Similarly, when valuing construction contracts and taking profits there is judgement involved, and judgement means that you cannot definitely prove something is right or wrong. So there is a series of contracts, each of which might be recognising proits which on their own were not material, together the profits recognised might be misleading because of the way the add up.
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@kengarrett said:
You are right.An engagement is any type of work, such as an investigation into a fraud. An audit is one type of engagement.
Sir may i know the difference between assertion based engagement and direct reporting engagement with one example each in simple terms
I have not heard of an assertion based engagement. Different types of engagement are well explained here:
But this is an article for P7 so a bit too detailed for F8
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