Management Assertions

Question 1

Existence

Answer 1

Management assertion that all assets, liabilities, and equity interests do actually exist.

Question 2

Occurrence

Answer 2

Management assertion that all of the transactions and events that have been recorded are valid, pertain to the entity, and have actually taken place.

Question 3

Completeness

Answer 3

Management assertion that all of the transactions, events, assets, liabilities, equity interests, and other disclosures that should have been recorded in the financial statements have been recorded.

Question 4

Valuation or Allocation

Answer 4

Management assertion that all assets, liabilities, and equity interests of the entity have been valued in accordance with the relevant financial reporting standards (e.g., GAAP) and are listed in the financial statements at the proper amount, and any resulting valuation adjustments have been appropriately recorded in the financial statements.

Question 5

Rights and Obligations

Answer 5

Management assertion that the entity is entitled to all rights of the assets, the liabilities are the legal responsibility of the entity, and all of the disclosed events and transactions pertain to the entity.

Question 6

Presentation and Disclosure

Answer 6

Management assertion that all transactions and events have been presented correctly and that all relevant information has been disclosed to financial statement users, usually in the footnotes to the financial statements.

Question 7

Assertions about Classes of Transactions

Answer 7

Occurrence/Cutoff, Completeness/Cutoff, Accuracy, Rights and Obligations, Classification, Presentation

Question 8

Assertions about Account Balances

Answer 8

Existence, Completeness, Accuracy, Valuation, and Allocation, Rights and Obligations, Presentation

Question 9

Procedure performed for Existence

Answer 9

Inspection of tangible assets

Question 10

Procedure performed for Occurrence

Answer 10

Inspection of records or documents (vouching)

Question 11

Procedure performed for Rights and Obligations

Answer 11

Confirmation

Question 12

Procedure performed for Completeness

Answer 12

Inspection of records or documents (tracing)

Question 13

Procedure performed for Cutoff

Answer 13

Inspection of records or documents (tracing or vouching)

Question 14

Procedure performed for Valuation or Allocation

Answer 14

Reperformance

Question 15

Procedure performed for Accuracy

Answer 15

Inspection of records or documents (tracing or vouching)

Question 16

Procedure performed for Presentation

Answer 16

Inquiry

Question 17

Procedure performed for Classification

Answer 17

Analytical procedures

Question 18

Cycle

Answer 18

A set of accounts that are logically grouped in the internal control system

Question 19

4 recognized cycles

Answer 19

(1) Revenue and Collection Cycle, (2) Acquisition and Expenditure Cycle, (3) Production Cycle, and (4) Finance and Investment Cycle

Question 20

8 General Audit Procedures

Answer 20

Inspection of records & documents (vouching, tracing, scanning), Inspection of tangible assets, Observation, Inquiry, Confirmation, Recalculation, Reperformance, Analytical Procedures