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Assertions and Audit evidence Essay

1. The allowance for doubtful accounts is fairly presented in amount. * Valuation or allocation assertion
2. All accounts payable owed as of the balance sheet date are included in the financial statements. * Existence or occurrence assertion
3. All purchase returns recorded in the general ledger are valid. * Existence or occurrence assertion
4. The allowance for doubtful accounts is fairly presented in amount. * Valuation or allocation assertion
5. All accounts payable owed as of the balance sheet date are included in the financial statements. * Completeness assertion
6. All purchase returns recorded in the general ledger are valid. * Existence or occurrence assertion
7. A retail client values its inventory using the retail method of accounting. * Valuation or allocation assertion
8. A construction client uses the percentage of completion method for recognizing revenues. * Existence or occurrence assertion
9. A client has a defined benefit pension plan and does not have competent employees to write footnote disclosures. * Presentation and disclosure assertion – classifications and understandability
10. Slow-moving items included in inventory have been properly identified and priced. * Valuation or allocation assertion
11. A client financed the acquisition of assets using preferred stock that pays a 3 percent dividend and must be redeemed from the shareholders next year. * Rights and obligations assertion
1. Bank statement sent directly to the auditor by the bank. (1) – Most reliable
2. Creditor monthly statement obtained from client’s files. (2) – Reliable, but subject to possible forgery
3. Vouchers in client’s unpaid voucher file. (4) Least reliable
4. Duplicate sales invoices in filled order file. (4) Least reliable 5. Time tickets filed in payroll department. (4) Least reliable
6. Credit memo in customer’s file. (4) Least reliable
7. Material requisitions filed in storeroom. (4) Least reliable
8. Bank statement in client’s files. (2) Generally reliable
9. Management working papers in making accounting estimates. (4) Least reliable
10. Paid checks returned with bank statement in (1) above. (3) Somewhat reliable
11. Letter in customer file from collection agency on collectability of balance. (2) Generally reliable
12. Memo in customer file from treasurer authorizing the write-off of the account. (4) Least reliable


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