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What are Management Assertions?Management assertions are claims made by members of management regarding certain aspects of a business. The concept is primarily used in regard to the audit of a company's financial statements, where the auditors rely upon a variety of assertions regarding the business. The auditors test the validity of these assertions by conducting a number of audit tests. Management assertions fall into the following three classifications. Transaction-Level AssertionsThe following five items are classified as assertions related to transactions, mostly in regard to the income statement:
Account Balance AssertionsThe following four items are classified as assertions related to the ending balances in accounts, and so relate primarily to the balance sheet:
Presentation and Disclosure AssertionsThe following five items are classified as assertions related to the presentation of information within the financial statements, as well as the accompanying disclosures:
There is a fair amount of duplication in the types of assertions across the three categories; however, each assertion type is intended for a different aspect of the financial statements, with the first set related to the income statement, the second set to the balance sheet, and the third set to the accompanying disclosures. If the auditor is unable to obtain a letter containing management assertions from the senior management of a client, the auditor is unlikely to proceed with audit activities. One reason for not proceeding with an audit is that the inability to obtain a management assertions letter could be an indicator that management has engaged in fraud in producing the financial statements. Test Prep This preview shows page 3 - 6 out of 8 pages. 8. In testing the completeness assertion for a liability account, an auditor ordinarily works from theA. financial statements to the potentially unrecorded items.B. potentially unrecorded items to the financial statements.C. accounting records to the supporting evidence.D. trial balance to the subsidiary ledger. Chapter 49. Management fraud generally refers to Get answer to your question and much more We have textbook solutions for you! The document you are viewing contains questions related to this textbook. Principles of Information Systems Reynolds/Stair Expert Verified C. intentional distortions of financial statements.D. violations of GAAS.10. External auditors are responsible Get answer to your question and much more 11. The probability that an audit team will give an inappropriate opinion on financial statements bestdescribes Get answer to your question and much more 12. If control risk increases, and all other risks in the audit risk model stay constant except the onereferred to below, which of the following statements is correct?A. Detection risk will increase.B. Inherent risk will increase.C. Audit risk will decrease.D. Detection risk will decrease. Chapter 513. The appropriate separation of duties doesnotinclude Get answer to your question and much more 14. Which of the following isnota component of internal controls? Get answer to your question and much more 15. If auditors assess control risk at the maximum level, they will tend to Get answer to your question and much more 16. In testing control activities, an auditor ordinarily selects from a variety of techniques, includingA. inquiry and analytical procedures.B. reperformance and observation.C. comparison and confirmation.D. inspection and verification. Chapter 617. Which of the following is not considered one of the three factors increasing the probability of fraud? Get answer to your question and much more Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document End of preview. Want to read all 8 pages? Upload your study docs or become a Course Hero member to access this document We have textbook solutions for you!The document you are viewing contains questions related to this textbook. The document you are viewing contains questions related to this textbook. Principles of Information Systems Reynolds/Stair Expert Verified How do you test for completeness assertions?In order to test completeness, the procedure should start from the underlying documents and check to the entries in the relevant ledger to ensure none have been missed.
What is the assertion of completeness?Completeness. This assertion attests to the fact that the financial statements are thorough and include every item that should be included in the statement for a given accounting period.
When an auditor tests the existence assertion for an asset she ordinarily works from the?In testing the existence assertion for an asset, an auditor ordinarily works from the accounting records to the supporting evidence.
On which assertion does the auditor focus in the audit of liabilities quizlet?Existence. In auditing the accrued liabilities account on the Balance Sheet, an auditor's procedures most likely would focus primarily on management's assertion of: Completeness.
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