- This topic has 4 replies, 3 voices, and was last updated 10 years ago by
.
- Posts
What does it means by testing assertion? From what I understand different testing senario have different testing assertion.But I want to understand what it means or an alternative word for assertion.
Assertion is what management personnels believe in the financial statements. Take sales transaction as an example. Completeness means that managment believe they have recorded all transactions occurred. And substantive test in this area would be auditor testing whether the balance on financial statement shows as what management said. Hope this helps.
Is it not what the “Auditor” needs to test to achieve the assertion level??? For example for cash they need to test Ownership, Valuation,Existence(Assertion) which could be obtain from (Audit Evidence) Bank letter. Completeness => “inspect”Bank statement, Bank reconciliation Ledger,Nominal ledger, Balance sheet
Is there specific Assertion for each part of balance sheet?
Auditor needs to test whether actual operation achieves assertion level. Reconciliation of bank statement and confirmation are substantive procedures to confirm certain assertions.
There are assertions for transactions, account balances and presentation/disclosure.
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.
- You must be logged in to reply to this topic.