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Hello Ken,
Are the financial statement assertions for cash balance important?
First assertion:
I do not understand the valuation assertion, as stated in BPP study text:
“Recorded cash balances are realisable at the amounts stated”
How different is this from the existence assertion?Second assertion:
Rights and obligation = “The entity has legal title to all cash balances shown at the period end”
Are there any specific audit procedures the auditor would perform to confirm this?Thank you in advance.
Valuation could be relevant if the cash is in a foreign currency. Otherwise the main assertions would be accuracy, exisrence and ownership (rights and obligations).
To test ownership you can look at the bank account title, authorised signatures and, very important, a certificate from the bank stating ownership.
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