[AScott89]

Every time I get a question about assertions I get so confused. How do you know if they’re testing for completeness, valuation and allocation, etc? I just don’t get it. Can someone explain this to me in plain english please?

BEC-65
AUD-72(8 '14); 68(11 '14)
FAR-
REG-

[silvercamaro77]

Try thinking about what the client would want to do to make themselves look better.

So if you're talking about inventory, that's an asset so the client would generally look better if they have more inventory so the risk is that they don't really have as much as they say so you want to test for existence (do they really have as much as they say they do).

With something like expenses, the client would look better with fewer expenses so you have to test for completeness (did they record all their expenses).

Does that help at all?

AUD- 95
FAR- 75
BEC- 83
REG- 85

Officially done! Exclusively used NINJA for BEC, REG, and FAR

[AScott89]

Eh not really. I need something more detailed I think. Like do the assertions differ at different points during the audit? Are certain assertions only for certain account balances? Is completeness the only assertion for expenses? There are time when I can't really picture it in my head and I need more detail to put the pieces together.

BEC-65
AUD-72(8 '14); 68(11 '14)
FAR-
REG-

[harrisbernie]

Hello,

This was a hard one for me also. However, I remembered by using the below notes.

I use CTS for completeness – Completeness-Trace-Source for completeness. Start with the source document, for example, shipping documents, inventory count sheet etc. Start with source document and trace back to ledger to make sure the financial statements are complete. Test to make sure that nothing is missing in the financial statements.

I use EVJ – Existence-Vouch-Journal – Start with the GL (journal) and vouch transaction to source document. You want to make sure that everything in the GL exists.

Assertion about valuation concern whether balance sheet components have been included at appropriate amounts. The questions are normally related to net realizable value (gross accounts receivable – allowance for uncollectible accounts). Making sure that allowance is appropriate.

Please see below for some more of my notes – I hope this helps.

Testing of Relevant Assertions

Completeness – Are all transactions reflected in the balance for the period? Perform analytical procedure, and reconcile sub ledger with control account.

Accuracy – Have the balance for specific accounts been recorded appropriately. (Make inquiries)

Valuation and allocation – Are balances reported in accordance to GAAP? (Trace, vouch, test)

Existence – Do the accounts and balances exist at the balance sheet date? Inspect and Confirm, vouch transactions.

Cutoff- Have transactions been recorded in the proper period? Consider whether transactions near year end have been

recognized in the proper period.

Rights and Obligations – Are the assets, expenses and payables those of the entities. Inspect contracts, cancelled checks etc

Occurrence – Did the transactions relate assertion that occurs? Review contracts and agreements, vouch transactions

Classification and Understandability – Is it properly reflected as an expense, asset or liability on the financial statement. Are they properly disclosed (Read financial statements and disclosures)

AUD 4/14 72, 7/14 89
FAR 10/14 68, 2/15, 78
BEC 4/15, 75 Thank you God! One more to go!!!
REG 5/15

[AScott89]

Thank you harrisbernie. That's very helpful. Anyone else have any suggestions?

BEC-65
AUD-72(8 '14); 68(11 '14)
FAR-
REG-

[thechapman]

If you think of it in a “professional skepticism” kind of way, it makes things easier. When we see a $50,000 account balance for accounts receivable, what is management trying to say they think is “true” about that number that we, as auditors, need to verify?

They are saying that the $50,000 A/R balance includes all accounts receivable.

They are saying all of those accounts receivable exist.

They are saying that they believe $50,000 is an accurate value for the account balance considering possible uncollectible accounts.

That is not an exhaustive list, but you see what I am getting at. Thinking about these things conceptually helps much more than just trying to memorize which assertions go with certain things. For example, is occurrence a relevant assertion regarding an account balance? No, because an account balance “exists”, it doesn't “occur/happen”. Once you get that kind of thought process down you should be good to go.

Passed - 2014

[AScott89]

Awesome thanks chapman

BEC-65
AUD-72(8 '14); 68(11 '14)
FAR-
REG-

[Ken]

that ‘s awesome notes. really helpful

REG : 62, 67, 81. Tick- Expire 01/02/2016
BEC : 72, 67,71,76. Tick Expire 10/25/2015
AUD : 60, 62, 62, 74(8/30) - 10/1/2015 - oh geez
FAR : 68, 64, 72(7/24) - 10/20/2015- oh geez

I am WHINING...

" Just take it without worrying about the 75. Man, that is not easy!"

[Author]

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