1. 1. MeetingWithITTR&CTeam Risk Assessment and Financial Statement Assertions March 17th, 2015 R&C/ ITT-SAP: ; Luis Torres Garcia; Yannick Rostand Kounga Taptue; David Vincent; Joseph Siegfried; Irynn Chay; Mirza Zeeshan Ahmed; Randolph Parman; Viswanathan Murugesh; Steven Diep; Naveed Ahmed
2. 2. What is Financial Statement Assertions? Financial statement assertions: A set of information that the preparer of financial statements is providing to another party. Financial statements represent a very complex and interrelated set of assertions. Are Managements explanation regarding the recognition, measurements, presentation and disclosure of information in the financial reports. Types of Financial Statement Assertions: There are basically different financial statement assertions that the auditors collect to justify each and every item in the financial statement. five
3. 3. 5 4 3 2 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. Completeness: Checking completeness of a financial statement is to analyze whether all the transactions that are already given in the financial statement are correctly included. 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. 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. 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. FiveFinancialStatementAssertions
4. 4. Management Assertions: Auditors decompose the broad assertions into a detailed set of statements referred to as management assertions, separated into three categories: CUTOFF: The transactions have been recorded in the correct accounting period. AUTHORIZATION: All transactions were properly authorized. COMPLETENESS: All transactions that should have been recorded are recorded. ACCURACY: The transactions were recorded at the appropriate amounts. This is not an assertion in Voyager. CLASSIFICATION: The transactions have been recorded in the proper accounts. Item 1 Item 2+3 Item 4 Item 5 Item 6 OCCURRENCE: The transactions recorded actually took place. Set 1 Transactions Set 2 Accounts Balance: Set 3 Presentation and Disclosure: Transactions & Events
5. 5. Management Assertions: Auditors decompose the broad assertions into a detailed set of statements referred to as management assertions, separated into three categories: VALUATION AND ALLOCATION: Assets, liabilities and equity balances are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded. COMPLETENESS: All assets, liabilities and equity balances that should have been recorded have been recorded. RIGHTS AND OBLIGATIONS: The entity holds or controls the rights to its assets and owes obligations to its liabilities. Item 1 Item 2 Item 3 Item 4 EXISTENCE: Assets, liabilities and equity balances exist. Set 1 Transactions Set 2 Accounts Balance: Set 3 Presentation and Disclosure: Accounts Balance as of period end
6. 6. Management Assertions: Auditors decompose the broad assertions into a detailed set of statements referred to as management assertions, separated into three categories: CLASSIFICATION AND UNDERSTANDABILITY: Financial statements are appropriately presented and described, and information in disclosures is clearly expressed. COMPLETENESS: All disclosures that should have been included in the financial statements have been included. RIGHTS AND OBLIGATIONS: The transactions pertained to the entity. ACCURACY AND VALUATION: Financial and other information is disclosed fairly and at appropriate amounts. Item 1 Item 2 Item 3 Item 4 Item 5 OCCURRENCE: The transactions have occurred. Set 1 Transacti ons Set 2 Accounts Balance: Set 3 Presentation and Disclosure:
7. 7. 1. "Auditing Standard No. 15.11". http://pcaobus.org/. Public Company Accounting Oversight Board. Retrieved 15 March 2015. 2. "Auditing Standard No. 15.2". http://pcaobus.org/. Public Company Accounting Oversight Board. Retrieved 15 March 2015. 3. "INTERNATIONAL STANDARD ON AUDITING 315 (REVISED) A124". http://www.ifac.org/. International Federation of Accountants. Retrieved 15 March 2015. 4. "AU Section 326". aicpa.org. American Institute of Certified Public Accountants. Retrieved 15 March2015. http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00326.pdf 5. http://finance.mapsofworld.com/financial-report/statement/assertions.html. Retrieve on March 17 2015.