Auditing
Review Sheet Period Test II

Chapter 4. Audit Evidence and Audit Documentation.

* Understand the types of management’s assertions (assertions about (1) account balances, (2) transactions, and (3) disclosures). Should be able to describe in own words, give own examples and relate to examples given in the exercises. * 1) Account Balances
Existence – assets, liabilities, and equity interests exist.
Rights and obligations – the entity holds or controls the rights to assets, and liabilities are the obligations of the entity
Completeness – all assets, liabilities and equity interests that should have been recorded have been recorded.
Valuation and allocation – assets, liabilities, and equity interests are included in the financial statements at appropriate amounts, and any resulting valuation or allocation adjustments are appropriately recorded. * 2) Transactions
Occurrence – transactions and events that have been recorded have occurred and pertain to the entity (sometimes referred to as validity)
Completeness – all transactions and events that should have been recorded have been recorded.
Authorization – all transactions and events have been properly authorized.
Accuracy – amounts and other data relating to recorded transactions and events have been recorded appropriately and properly accumulated from journals and ledgers.
Cutoff – transactions and events have been recorded in the correct accounting period.
Classification – transactions and events have been recorded in the proper format * 3) Presentation and Disclosure
Occurrence and rights and obligations – disclosed events, transactions ad other matters have occurred and pertain to the entity.
Completeness – all disclosures that should have been included in the financial statements have been included.
Classification and understandability – financial information is appropriately