M ODULE 4 A UDITING M ANAGEMENT A SSERTIONS CA. S RIPRIYA K UMAR Practical/ Article Training.

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Presentation transcript:

M ODULE 4 A UDITING M ANAGEMENT A SSERTIONS CA. S RIPRIYA K UMAR Practical/ Article Training

L EARNING O BJECTIVES What is an Assertion Assertions applicable to transactions Assertions applicable to account balances Component wise Assertion Illustration 2

W HAT IS AN A SSERTION ? An Intro.

A SSERTION D EFINED 4 Financial statement assertions are attributes of financial statements that the preparer of financial statements is providing,“asserting” or stating to another party.

R EPRESENTATIONS OF M ANAGEMENT Assertions are representations of management that are embodied in all financial statement components or classifications 5

A SSERTIONS D RIVE A UDIT P ROCEDURES Once we know what to test and what is expected of a financial statement component, we proceed to test the same through Audit procedures 6

A SSERTIONS FOR C LASSES OF T RANSACTIONS AND E VENTS An Intro. OccurrenceCompletenessAccuracy CutoffClassification

T RUE AND F AIR True & Fair Completeness OccurrenceValuationExistence Rights & Obligations Disclosure & Presentation 8

C LASSES OF T RANSACTIONS AND E VENTS All transactions and events that have been recorded have occurred and pertain to the entity. Occurrence All transactions and events that should have been recorded have actually been recorded. Completeness Amounts and other data relating to recorded transactions and events have been recorded appropriately. Accuracy Transactions and events have been recorded in the correct accounting period. Cutoff Transactions and events have been recorded in the proper accounts. Classification 9

A SSERTIONS FOR A CCOUNT B ALANCES AT E O P Assets, liabilities and equity interests exist. Existence The entity holds or controls the rights to assets, and liabilities are the obligations of the entity. Rights & Obligations Assets, liabilities, and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded. Valuation & Allocation 10

A SSERTIONS FOR A CCOUNT B ALANCES AT E O P 11 Occurrenc e Completenes s Accurac y Cut off ClassificationExistence Rights & Obligations Valuation and allocation Fixed Assets Yes Investments Yes Inventories Yes Receivables & Revenue Yes Cash and Bank Yes Loans and Advances Yes Share Capital Yes Borrowings Yes Expenses Liabilities Provisions Yes

W HAT N EXT ? W HAT DO I D O ? I Know Assertions!