Financial Statement Assertion

[Hotianna]

Hi All;

My assertion question is as follows:

The financial statement assertions in ISA500 says that they fall into three classes:

1. Classes of transactions
2. Account balances
3. Presentation & Disclosure

Can you put the classes in lay man terms for me especially "classes of transaction". Does it mean you put them for example Assets to Assets, Liabilities to Liabilities etc........

Thanks a million again............looking forward to your favourable response.

[Suze]

hummm

I am now on the topic of assertions. Give me a day and I will answer your question.

[Suze]

Hi

There are 7 assertions (COD FISH) :

* completeness
* occurrence
* Disclosure
* Rights and Obligations
* Accurate calculations
* cut-off
* existence

We use these assertions to carry out substantive testing.

[Suze]

classes of transactions would be fixed assets as a class, inventory as a class etc.

if we are testing inventory we would not use the assertion disclosure but we would use the assertions :

> Existence - to see if the inventory exists.
> valuation - to see the the inventory is being valued at NRV

I hope this helps

[Sravanthi Y C]

HI

Financial statements are a summary of managements assertions.

Types of assertions are

Completeness, Cutoff, Classification
Occurrence
Measurement
Presentation and disclosure
Accuracy
Rights and obligations
Existence

These make the word COMPARE. (Mnemonics)

ISA 500, Audit evidence divides assertions into

Transactions and events
Account balances
Presentation and disclosure


If it relates to a transaction, then verify whether the existing controls will affect the assertions of:
COACC
COACC = Completeness, Ocuurence, Accuracy, Cutoff and Classification

If it relates to a year end balance then verify whether the existing controls will affect the assertions of:
CMRECC
CMRECC = Completeness, Measurement, Rights and Obligations, Existance, Cutt-off, Classification

If it relates to the disclosures in the FS then verify whether the existing controls will affect the assertions of:
COMPAC
COMPAC = Completeness, Occurrence, Measurement, Presentation, Accuracy, Classification

I think this helps and sloves your problem
:cool: