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TL;DR
First off you need to understand what the word “assertion” means.
Assertion is a strong confident belief. In terms of F8 think of it as a “claim”.
As in, the managment claims that a number in the financial statements is Complete, Accurate, Valued corectly, e.t.c. –
By a number in the financial statements I mean for instance, the amount of P.P.E.
And it is up to you – the auditor – to verify that this claim is true… and fair.
Maybe it’s not. Maybe they the managment forgot to depreciate this year. Which means the amount of P.P.E is misstated. That is, the “claim” – the assertion – that it is valued correctly, actually it isn’t!
How do you verify / confirm this? Using substantive procedures.
What are substantive procedures? Ok I’ll stop there. 🙂
Hope this helped.
Ok, great! Thank you! 🙂
Say, for the sake of argument that it did, – you never know what could come up – how can one elaborate on that?
Say for 2-3 points.
Thanks again.
I think I answered my own question:
“For a retail business, the cost of sale is the purchase price of the item. For a manufactured good, the cost of sale includes Direct Material, Direct Labor, and Factory Overhead associated with producing it.”
So I guess we were talking about a retail business.. 🙂