FS Assertions

Ahmed Raza Mir

Management makes many representations (explicit or otherwise), that are embodied in the
financial statements in order to prepare
1. financial statements as per FRFW and
2. giving true and fair value
These are used by the auditor in consideration of
different type of possible misstatement
collect evidence to support these assertions
Assertions about classes of transactions and events for the period

Ahmed Raza Mir, ACA (ARTT Business School)

S.r.
1

Assertion
Occurrence

Explanation
Transactions recorded
have occurred and
pertains to the entity

Examples
No future transaction is recorded.
(No overstatement)

All provisions have been

made.
All sales have been recorded
All purchases have been
recorded
All expenses and incomes are
neither overstated nor
understated with respect to value

Eg unapproved restructuring

Completeness

All transactions (that have

occurred) have been recorded
i.e. there is no understatement

Accuracy

Amounts and other data

relating to transactions have
been recorded appropriately
(correct amounts).

Cutoff

Transactions have been

recorded in correct accounting
period.

No future sales / revenue is

recorded in the current period

Classification

Transactions have been

recorded in the proper
accounts

Sale of PPE is not classified as

sales / revenue

Assertions about account balances at the period end:

S.r.
1

Assertion
Existence

Explanation
Assets, liabilities, and equity
exist

Completeness

All assets, liabilities and equity

that should have been
recorded are recorded.

Examples
All physical assets exists.
All liabilities are obligations
which the company have to
settle
No overstatement /
understatement of assets and
liabilities

Artt Business School: F45 PECHS Block 6 Behind Fortune Centre Main shahrah-e-Faisal Karachi. Contact 021-34523175-76

FS Assertions
Ahmed Raza Mir
3

Rights and
obligation

Valuation

1. The company holds and

controls
the assets recorded
the rights to the assets
recorded
2. The company liabilities
represents its obligation at
present
1. Assets, liabilities, and equity
are included in the financial
statements at appropriate
amounts (Carrying
amounts) ; and
2. Adjustments relating to
valuation/allocation
have been recorded.

All assets and liabilities listed in

the SOFP belongs to the
company.
Eg. Pledged assets held by the
entity are not ours and our assets
pledged by others belong to us
All assets which are to
revalued are revalued
depreciated and depreciated
adjusted for time are
adjusted.

Ahmed Raza Mir, ACA (ARTT Business School)

Assertions about Presentation and Disclosures:

S.r.
1

Assertion
Occurrence and
rights and
obligations

Completeness

Classification and
understandability

Accuracy and
valuation

Explanation
Disclosed events,
transactions, and other
matters have occurred and
Relate to the entity.
All disclosures have been
included in financial
statements.
Financial information is
appropriately presented and
described, and
disclosures are clearly
expressed.
Financial and other
information are disclosed fairly
and at appropriate
amounts (correct carrying
amounts)

Examples
All disclosures and representing
companys state of affairs
No under disclosure to conceal
information
No merged disclosures

Fair and unbiased presentation

(no prominent / small disclosures
issues)

Artt Business School: F45 PECHS Block 6 Behind Fortune Centre Main shahrah-e-Faisal Karachi. Contact 021-34523175-76