Page 82 - Internal Auditing Standards

Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts

To make the use of assertions slightly easier to apply for auditing smaller entities, this Guide has combined a
number of the assertions so that they may apply across all three categories (i.e., balances, transactions, and
disclosure). The four combined assertions and the individual assertions they address are illustrated in the
exhibit below.
Exhibit 6.3-1

Presentation and
Combined Assertions Classes of Transactions Account Balances
Disclosure
Completeness (C) Completeness Completeness Completeness
Existence (E) Occurrence Existence Occurrence

Accuracy and Accuracy Rights and Obligations Accuracy
Cutoff (A) Cutoff Rights and Obligations
Classifi cation Classifi cation and
Understandability
Valuation (V) Valuation and allocation Valuation

Note:
When the auditor chooses to use combined assertions such as those outlined above, it is important to

remember that the accuracy and cutoff assertion also includes rights and obligations, and classifi cation and
understandability.

The following exhibit provides a description of the four combined assertions used in this Guide.

Exhibit 6.3-2

Combined
Description
Assertion
Completeness (C) Everything that should be recorded or disclosed in the financial statements has been

included.
There are no unrecorded or undisclosed assets, liabilities, transactions, or events;

there are no missing or incomplete financial statement notes.
Existence (E) Everything that is recorded or disclosed in the financial statements exists at the

appropriate date and should be included.

Assets, liabilities, recorded transactions, and other matters included in the fi nancial
statement notes exist, have occurred, and pertain to the entity.
Accuracy and All liabilities, revenues, expense items, and rights to assets (in the form of a hold or
Cutoff (A) control) are the property or obligation of the entity and have been recorded at the

proper amount and allocated (cutoff) to the proper period. This also includes proper
classification of amounts and disclosures in the fi nancial statements.

Valuation (V) Assets, liabilities, and equity interests are recorded in the financial statements at the

appropriate amount (value).
Any valuation or allocation adjustments required by their nature or applicable
accounting principles have been appropriately recorded.

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