Guide to Using International Standards on Auditing in - IFAC

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<strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts
To make the use of assertions slightly easier <strong>to</strong> apply for auditing smaller entities, this <strong>Guide</strong> 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
Combined Assertions Classes of Transactions Account Balances
Presentation and
Disclosure
Completeness (C) Completeness Completeness Completeness
Existence (E) Occurrence Existence Occurrence
Accuracy and
Cu<strong>to</strong>ff (A)
Accuracy
Cu<strong>to</strong>ff
Classification
Rights and Obligations
Valuation (V) Valuation and allocation Valuation
Accuracy
Rights and Obligations
Classification and
Understandability
Note:
When the audi<strong>to</strong>r chooses <strong>to</strong> use combined assertions such as those outlined above, it is important <strong>to</strong>
remember that the accuracy and cu<strong>to</strong>ff assertion also includes rights and obligations, and classification and
understandability.
The following exhibit provides a description of the four combined assertions used in this <strong>Guide</strong>.
Exhibit 6.3-2
Combined
Assertion
Completeness (C)
Existence (E)
Accuracy and
Cu<strong>to</strong>ff (A)
Valuation (V)
Description
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.
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 financial
statement notes exist, have occurred, and pertain <strong>to</strong> the entity.
All liabilities, revenues, expense items, and rights <strong>to</strong> assets (in the form of a hold or
control) are the property or obligation of the entity and have been recorded at the
proper amount and allocated (cu<strong>to</strong>ff) <strong>to</strong> the proper period. This also includes proper
classification of amounts and disclosures in the financial statements.
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.