@done2014 Assertions.
Directional assertions are completeness and existence/occurrence.
For completeness, you need to examine evidence from source document to FS. It's primarily looking for unrecorded liabilities. For example, if you want to know if a shipment is recorded, you need to look at invoices.
For existence and occurrence, you want to know if the transaction is really happened, assuming you are testing occurrence for transactions.
Valuation, allocation, and accuracy is the assertion that amounts are recorded accurately in FS or in the footnotes.
Classification and understand ability mostly relates to disclosures. For example, an auditor will care about the classifications of the securities, whether it's available-for-sale, held-to-maturity, or trading.
Rights and obligations relates to disclosures as well. Also, when an auditor perform a confirmation of AR, he or she is determining whether or not the client own those amounts.
Cutoff relates to proper period. Management tends to overstate their revenues by recording next period's revenues into current year's revenues. Cutoff procedures would test that.
Hope this helps.
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