4.03 - MANAGEMENT'S ASSERTIONS

Question 1

4.03 - MANAGEMENT’S ASSERTIONS

An auditor observes the mailing of monthly statement to a client’s customers and reviews evidence of follow-up
on errors reported by the customers. This test of controls most likely is performed to support management’s financial
statement assertion(s) of

Completeness | Existence

A) No | Yes
B) No | No
C) Yes | No
D) Yes | Yes

Answer 1

A) No | Yes

Observing the mailing of monthly statements and reviewing evidence of follow-up on errors reported will provide the
auditor with evidence about whether the receivables actually exist.

To obtain evidence supporting the assertion of completeness, the auditor would trace transactions from shipping documents to accounts receivable to make certain that all transactions have been recorded.

Question 2

4.03 - MANAGEMENT’S ASSERTIONS

Which of the following is not an assertion that relates to events and transactions?

A) Completeness
B) Existence
C) Classification
D) Cutoff

Answer 2

B) Existence

The assertions related to events and transactions include completeness, cutoff, accuracy, classification, and occurrence.

Existence is an assertion related to account balances.