Management assertions

Management assertions

In a financial audit, management assertions or financial statement assertions is the set of information that the preparer of financial statements (management) is providing to another party. Bir P (1975) "Financial statements represent a very complex and interrelated set of assertions." At the most aggregate level, the financial statements include broad assertions such as "total liabilities as at 31 December are $50 million", "total revenue for the year is $9 million" and "net income for the year is $3 million".

Auditors decompose these broad assertions into a detailed set of statements referred to as management assertions, separated into three categories:

  1. Transactions:
    • Occurrence — the transactions actually took place
    • Completeness — all transactions that should have been recorded have been recorded
    • Accuracy — the transactions were recorded at the appropriate amounts
    • Authorization — all transactions were properly authorized
    • Cutoff — the transactions have been recorded in the correct accounting period
    • Classification — the transactions have been recorded in the proper accounts
  2. Accounts balances:
    • Existence — assets, liabilities and equity balances exist
    • Rights and Obligations — the entity holds or controls the rights to its assets and owes obligations to its liabilities
    • Completeness — all assets, liabilities and equity balances that should have been recorded have been recorded
    • Valuation and Allocation — assets, liabilities and equity balances are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.
  3. Presentation and disclosure:
    • Occurrence — the transactions have occurred
    • Rights and Obligations — the transactions pertained to the entity
    • Completeness — all disclosures that should have been included in the financial statements have been included
    • Classification and Understandability — financial statements are appropriately presented and described, and information in disclosures are clearly expressed.
    • Accuracy and Valuation — financial and other information is disclosed fairly and at appropriate amounts.

References

  • Knechel, Salterio and Ballou (2007). Auditing: Assurance & Risk (3rd ed.). Thompson South-Western. 
  • Template:Http://www.tncpa.org/journal/articles/Auditing Management Assertions.pdf

Wikimedia Foundation. 2010.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • Competency management system — Competency (or Competence) Management Systems (CMS or CompMS because CMS is a more common homonym) are usually associated with, and may include, a Learning Management System (LMS). The LMS is typically a web based tool that allows access to… …   Wikipedia

  • Coordinated Management of Meaning — Coordinated Management of Meaning, or CMM, is a theory of communication based on the flow of information or data between two people. The theory states the use of language creates the social world around it. In all, CMM heavily relies on three… …   Wikipedia

  • Coordinated management of meaning — (CMM), is a practical theory[1] that sees communication as doing things fully as much as talking about them. Taking the communication perspective consists of looking at communication (rather than through it to what it is ostensibly about) and… …   Wikipedia

  • Privilege Management Infrastructure — Privilege Management is the process of managing user authorisations based on the ITU T Recommendation X.509. The 2001 edition of X.509 [1] specifies most (but not all) of the components of a Privilege Management Infrastructure (PMI), based on… …   Wikipedia

  • List of accounting topics — Following is a list of accounting topics * Accounting Ethics * Accounting for risk * Accounting information system * Accounting methods * Accounting period * Accounting reform * Accounting scandals * Accounting software * Accounts payable *… …   Wikipedia

  • Financial audit — A financial audit, or more accurately, an audit of financial statements, is the examination by an independent third party of the financial statements of a company or any other legal entity (including governments), resulting in the publication of… …   Wikipedia

  • Security Assertion Markup Language — (SAML) is an XML based standard for exchanging authentication and authorization data between security domains, that is, between an identity provider (a producer of assertions) and a service provider (a consumer of assertions). SAML is a product… …   Wikipedia

  • TM-Sidhi program — The TM Sidhi program is a form of meditation introduced by Maharishi Mahesh Yogi in 1975. It is based on, and described as a natural extension of the Transcendental Meditation technique (TM).[1][2] The purpose of the TM Sidhi program is to… …   Wikipedia

  • SOX 404 top-down risk assessment — In financial auditing of public companies in the United States, SOX 404 top down risk assessment (TDRA) is a financial risk assessment performed to comply with Section 404 of the Sarbanes Oxley Act of 2002 (SOX 404). The term is used by the U.S.… …   Wikipedia

  • Leadership — Leader redirects here. For other uses, see Leader (disambiguation). For other uses, see Leadership (disambiguation). Psychology …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”