What are the assertions used in audit?

ISA315 categorizes the different assertions in three categories which are further classified as follows:

1. Assertions about classes of transactions and events:
   1. Occurrence: transactions and events so recorded in the financial statements actually occurred and relates to the same period.
   2. Completeness: all such transactions and events that required recording have been recorded
   3. Accuracy: transactions and ancillary information have been recorded with accurate amounts
   4. Cutoff: only those transactions and events have been recorded that pertains to the accounting period under consideration
   5. Classification: transactions and events have been recorded in the related accounts properly
2. Assertions about account balances at the period end:
   1. Existence: all the assets, liabilities and other interests that appear in the financial statements actually exist.
   2. Rights and obligations: the assets presented in the financial statements are actually assets for which entity holds the ownership right or has all the necessary controls the right to use the asset. Similarly, the liabilities recorded are actually the obligations of the entity.
   3. Completeness: all the assets, interests and obligations of the entity that required recording have been recorded in the financial statements
   4. Valuation and allocation: all the assets, obligations and equity interests have been valued appropriately and if any allocation was need than it has been done already.
3. Assertions about presentation and disclosure:
   1. Occurrence and rights and obligations: transactions, events and the related or other matters disclosed in the financial statements actually occurred.
   2. Completeness: all the necessary disclosures that required recording have been recorded.
   3. Classification and understandability: financial information in the financial statement has been presented appropriately with clear expression of disclosures to the extent possible to help users of financial statements.
   4. Accuracy and valuation—financial or non-financial information is disclosed in the financial statements fairly.

Transaction-level assertions. The following five items are classified as assertions related to transactions, mostly in regard to the income statement:

• Accuracy. The assertion is that the full amounts of all transactions were recorded, without error.
• Classification. The assertion is that all transactions have been recorded within the correct accounts in the general ledger.
• Completeness. The assertion is that all business events to which the company was subjected were recorded.
• Cutoff. The assertion is that all transactions were recorded within the correct reporting period.
• Occurrence. The assertion is that recorded business transactions actually took place.

Account balance assertions. The following four items are classified as assertions related to the ending balances in accounts, and so relate primarily to the balance sheet:

• Completeness. The assertion is that all reported asset, liability, and equity balances have been fully reported.
• Existence. The assertion is that all account balances exist for assets, liabilities, and equity.
• Rights and obligations. The assertion is that the entity has the rights to the assets it owns and is obligated under its reported liabilities.
• Valuation. The assertion is that all asset, liability, and equity balances have been recorded at their proper valuations.

Presentation and disclosure assertions. The following five items are classified as assertions related to the presentation of information within the financial statements, as well as the accompanying disclosures:

• Accuracy. The assertion is that all information disclosed is in the correct amounts, and which reflect their proper values.
• Completeness. The assertion is that all transactions that should be disclosed have been disclosed.
• Occurrence. The assertion is that disclosed transactions have indeed occurred.
• Rights and obligations. The assertion is that disclosed rights and obligations actually relate to the reporting entity.
• Understandability. The assertion is that the information included in the financial statements has been appropriately presented and is clearly understandable.