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Can you please explain what does it mean by the follwing sentence :
Auditor should asses the risk of material misstatement at the assertion level. What does it mean by ” assertion level ” ?
Explanation in simple english and with a example will be highly appreciated because english is not my first language and I find it hard to understand difficult words.
Thank you
An “assertion” is a statement given as absolute fact.
So the “assertion level” is the level at which statements are presented as completely true.
E.G
Management tells the auditor the financial statements show a true valuation of inventory – management are formally “asserting” this statement as being correct, so we call this at the “assertion level”.
Just because management give a statement at the assertion level, doesn’t mean it is actually true – but I didn’t need to tell you that!
(Look up the definition of assertion.)
Thank you 🙂 I saw the meaning of word assertion but still I was not able to understand. You made it easy for me to understand by giving an example 🙂
Assertion is the representation made by management about FS. for example management say
” all transaction that should have been recorded haven been recorded”
this is an assertion for FS as a whole .ASSertion levels are three
1.About classes of transaction
2.about account balances
3.about presentations&disclosure.An e-book for p7 is available at https://adf.ly/KkQbQ helpful in quick revision.
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Thank you zubair1310, the link you shared is very good for a quick revision!
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In addition, in F8 we did assertions such as COMPLETE, EXISTENCE and others. The auditor do these assertions during the audit and this period is called assertion level. I STAND CORRECTED.
The auditor actually does not “do these assertions”. These are the assertions management makes. The auditor in planning the audit will assess the risk inherent in the assertions management makes, by assessing what could go wrong with the control.
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Thanks for the correction alkemist.
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