Assertions in Auditing: 1) Confirmation from debtors may provide audit evidence
ID: 2579813 • Letter: A
Question
Assertions in Auditing:1) Confirmation from debtors may provide audit evidence for existence and rights and obligations, but not for valuation, why not?
2) How do auditors apply assertions in the planning and testing stage of the audit?
3) Give an example for each of the following assertions: Occurrence, Completeness, Classification, Accuracy.
4) Describe how management assertions relates to the study of accounting information systems.
5) What are the auditing assertions about account balances at the year-end that cannot be usually address by the audit procedures? Why not? Assertions in Auditing:
1) Confirmation from debtors may provide audit evidence for existence and rights and obligations, but not for valuation, why not?
2) How do auditors apply assertions in the planning and testing stage of the audit?
3) Give an example for each of the following assertions: Occurrence, Completeness, Classification, Accuracy.
4) Describe how management assertions relates to the study of accounting information systems.
5) What are the auditing assertions about account balances at the year-end that cannot be usually address by the audit procedures? Why not?
1) Confirmation from debtors may provide audit evidence for existence and rights and obligations, but not for valuation, why not?
2) How do auditors apply assertions in the planning and testing stage of the audit?
3) Give an example for each of the following assertions: Occurrence, Completeness, Classification, Accuracy.
4) Describe how management assertions relates to the study of accounting information systems.
5) What are the auditing assertions about account balances at the year-end that cannot be usually address by the audit procedures? Why not?
Explanation / Answer
1. Confirmation from debtors may provide audit evidence for existence and right and obligations but not for valuation because customer/debtor may sign the confirmation without checking their books and hence not reliable.
2. Assertions in the Planning and testing:
a. Understanding the entity
b. Assessment of Risk of Material misstatement due to fraud and error
c. Will help to provide basis for determining the nature, timing and extent of audit proceedures.
Testing:
a. Substantive testing to be performed to identify Risk
b. Tests of controls are also performed to assess the effectiveness of controls.
3. Example of:
a. Occurrence: Rental payment/expenses relate to the period for which premise occupied and as per Lease agreement terms. Also payment has been made to authorised personnel only.
b. Completeness: Salaries for all authorised perosnnel has been accounted for in books.
c. Classification: Travel expenses of employee has been allocated based on their deparment ; Finance/HR/Sale (operating) or production realted.
d. Accuracy: Rental amount has been calculated based on actual lease and deduction of tax has been made as per law.
4. Describe how management assertions relates to the study of accounting information systems.
Management assertions are claims regarding the condition of the business organization in terms of its:
operations,
financial results,
compliance with laws and regulations.
The role of the auditors is to analyze the underlying facts to decide whether information provided by management is fairly presented.
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