1. Existence: The assertion on existence is made to check whether the specified assets and liabilities are present at the given date. It is also required to check that the transactions that are recorded took place at the specified date. In order to test these items of the financial statement, it is not sufficient that only books are consulted which record the assets or the liabilities. There should be proof of the existence of the physical assets or liability. For checking existence help is also sought from outside.
2. Completeness: Checking completeness of a financial statement is to analyse whether all the transactions that are already given in the financial statement are rightfully included. In order to abide by the completeness assertion, the auditors prove with the help of sufficient evidence that all the recorded transactions deserve to be included. This is further supported with an external document so as to provide evidence regarding the occurrence of the transaction.
3. Valuation: Valuation basically checks whether the different components of the financial statement have been included in the right proportion. The components are assets, liabilities,expense and revenue. The auditor does this with the help of GAAP.
4. Rights and obligations: This is to check whether the assets that are included in the financial statement are the rights and the liabilities are the obligations of the company. In order to ensure this, sometimes special purpose entities are created.
5. Presentation and Disclosure: This assertion is to ensure whether the items in the financial statements are classified in the right way. It is important to check that the account balance is calculated as well as disclosed properly.
Junaid Yousaf
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