Forums › ACCA Forums › ACCA AA Audit and Assurance Forums › Assertions
- This topic has 5 replies, 5 voices, and was last updated 5 years ago by jetavi.
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- November 5, 2018 at 9:28 pm #483941
Hi
Can someone please ell me how would we know which assertion goes where? Like in sales, purchase, inventory etc.
Please help!
ThanksNovember 8, 2018 at 10:32 am #484178This is a vague question. You need to be a bit more specific. If you are after an understanding of assertions, I suggest you review the material online here and ask the tutor.
November 9, 2018 at 12:52 pm #484284Look, there can be assertions with respect to financial statements and account balances.
Financial statements: (Mnemonic: ACC COP)
1. Accuracy
2. Completeness
3. Cut-off
4. Classification
5. Occurrence
6. Presentation.Account balances: (Mnemonic: PC CARE)
1. Presentation
2. Completeness
3. Classification
4. Accuracy, Valuation, Allocation
5. Rights and Obligations
6. Existence.Read up on these and think. Inventory is an account balance so the related assertions would be Existence, Valuation, Completeness and such.
Sales and Purchases would include assertions like cut-off to ensure that it relates to current year, Occurrence to ensure the transaction actually occurred in addition to accuracy and completeness.
I hope this helps. Happy Studying!
November 9, 2018 at 3:28 pm #484302@avani04 has put it really well!
Just to summarise it and give a hint to remember it easily.
If an item affects and is a part of the Statement of Financial Position (SOFP) then what @avani04 has mentioned mnemonic ACC COP will be applied to that item (eg Non – Current Assets, Inventory etc)If an item affects and is a part of the Statement of Profit or loss (SOPL) then what mnemonic is mentioned above PC CARE will be applied to that item ( eg Purchases, Sales, expenses etc)
An advise that was given to me by someone, don’t just remember the mnemonic, remember what it stands for and means too! I know this may seem a bit silly advice but students do remember the mnemonic in exam, however forget what it actually stands for!
Hope that helps.
February 21, 2019 at 10:29 am #506005Hopefully this isn’t a dead thread 🙂 !
With regards to assertions, when do you refer to them in exam questions? Is it just in Substantive Testing? Or in Tests of Control and Audit Risk as well? I feel like I was just throwing them about in my last exam (hence 45%), without really knowing if I should be referring to them. This is going to be my third time taking this exam and the only one I have really struggled with.
Thanks.
February 22, 2019 at 7:44 pm #506254You just brought it back to life!
Well assertions are included in substantive testing and AR.
Like here is something from an examiner’s report :
“To explain the audit risks candidates need to state the area of the Financial Statements impacted with an assertion, or a reference to under/over/misstated or a reference to inherent control or detection risk”But it all depends on the scenario and the question.
Sometimes some assertions can be used in TOC as well and that’s mostly likely ACCURACY.
Because basically internal controls are for prevention, detection and correction of error(misstatements) on a timely basis.
Does that make it any better?
With the time remaining I will advice you to solve some past paper questions under timed conditions then check your response alongside the solution.
It is important that you read the solution provided and also the examiner’s comments on that question to know where you are going wrong, what points you could have mentioned and to know what the examiner really wants.Hope this helps.
All the best.
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