Audit Assertions

Assertions may be classified into the following types:

Assertions relating to classes of transactions |

Assertions | Explanation | Examples: Salaries & Wages Cost |

Occurrence | Transactions recognized in the financial statements have occurred and relate to the entity. | Salaries & wages expense has been incurred during the period in respect of the personnel employed by the entity. Salaries and wages expense does not include the payroll cost of any unauthorized personnel. |

Completeness | All transactions that were supposed to be recorded have been recognized in the financial statements. | Salaries and wages cost in respect of all personnel have been fully accounted for. |

Accuracy | Transactions have been recorded accurately at their appropriate amounts. | Salaries and wages cost has been calculated accurately. Any adjustments such as tax deduction at source have been correctly reconciled and accounted for. |

Cut-off | Transactions have been recognized in the correct accounting periods. | Salaries and wages cost recognized during the period relates to the current accounting period. Any accrued and prepaid expenses have been accounted for correctly in the financial statements. |

Classification | Transactions have been classified and presented fairly in the financial statements. | Salaries and wages cost has been fairly allocated between:

-Operating expenses incurred in production activities;

-General and administrative expenses; and

-Cost of personnel relating to any self-constructed assets other than inventory. |

Assertions relating to assets, liabilities and equity balances at the period end |

Assertions | Explanation | Examples: Inventory balance |

Existence | Assets, liabilities and equity balances exist at the period end. | Inventory recognized in the balance sheet exists at the period end. |

Completeness | All assets, liabilities and equity balances that were supposed to be recorded have been recognized in the financial...