In particular
we are concerned with the requirement of those assertions-‘assertions about
account balance at the period end’, but of course, the other assertions
particularly those relating to transaction, also apply.
The
assertions set out the following matters about which the auditor has to gather
sufficient reliable evidence so as to verify their truth-or otherwise:
assertions set out the following matters about which the auditor has to gather
sufficient reliable evidence so as to verify their truth-or otherwise:
One
mnemonic often used by student in connection with the audit of balance sheet
items is:
mnemonic often used by student in connection with the audit of balance sheet
items is:
·
Cost
Cost
·
Authorisation
Authorisation
·
Value
Value
·
Existence
Existence
·
Beneficial Ownership
Beneficial Ownership
·
Presentation in the Accounts.
CAVE BOP
Presentation in the Accounts.
CAVE BOP
Which
does cover all aspects of the assertions and might be easier to remember?
does cover all aspects of the assertions and might be easier to remember?
Most
examination questions in this area can be answered adequately by running
through each of these and devising means of verifying each aspect.
examination questions in this area can be answered adequately by running
through each of these and devising means of verifying each aspect.
You
will also appreciate that the amount of evidence required will depend partly on
the risk of a misstatement in the accounts.
will also appreciate that the amount of evidence required will depend partly on
the risk of a misstatement in the accounts.
Older
text books tended to stress existence, ownership and value only. The addition
of presentation reflects the relatively greater importance attached now to the
‘fair’ as well as the ‘true’ view given by the financial statement and the
importance of the appropriate selection and disclosure of accounting policies.
text books tended to stress existence, ownership and value only. The addition
of presentation reflects the relatively greater importance attached now to the
‘fair’ as well as the ‘true’ view given by the financial statement and the
importance of the appropriate selection and disclosure of accounting policies.
For
assets held at the beginning of the year, the acquisition will have been dealt
with in a previous year. The presentation will, of course, need to be
consistent with the presentation adopted in previous tears; most examination
questions state whether or not the assets concerned were purchased in the year
under review.
assets held at the beginning of the year, the acquisition will have been dealt
with in a previous year. The presentation will, of course, need to be
consistent with the presentation adopted in previous tears; most examination
questions state whether or not the assets concerned were purchased in the year
under review.
You
will appreciate that this distinction does not arise with current assets.
will appreciate that this distinction does not arise with current assets.