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What an 'assertion' means?

Yogesh Shah (Managing Corporate Finance) (1051 Points)

04 February 2012

Hi Guys,

Can anybody tell me what is meaning of an ASSERTION in our Auditing terms along with suitable EXAMPLE?

When I referred SA 315 (Identifying and Assessing Risk of Material Misstatement through Understanding the Entity and its Environment) –

I found that Assertion is “representation made by the Mgmt which is disclosed in financial statements”.

And “auditor has to identify and assess risk of material misstatement at an assertion level about class of transaction or account balance or disclosure”.

And various types of assertions are classification, completeness, valuation etc.

But from this I didn’t get any clue about what it exactly is.

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13 Replies

CA Suraj Lakhotia (IndigoLearn) (4898 Points)
Replied 04 February 2012

The grammatical meaning of assertion is "a positive statement, usually made without an attempt at furnishing evidence"

There are many statements made by management in the financial statements in the form of notes to accounts. These may be called assertions by the managemen

When you go through the notes to accounts of a financial statement, you will see that the management gives some statements regarding the accounting policies, significant disclosures and other details which would be useful for the user of the financial statement.

Let us say there is some extraordinary item included in Other income. A note to this would be put in the notes to accounts. Now as an auditor, one has to ensure that the note made in this regard are free of material misstatements. The auditor has to assess the risk of material misstatements in these assertions. He may have to review the way/methodology adopeted by the management in making these assertions.

There may be other assertions which may have significant impact on user's understanding of financial statements.

I could not understand the types of assertions mentined by you. May be these are not types of management assertions but are the assertions (statements made) by an auditor.

Like if an auditor says that the financial statements are free of material misstatements, it would imply that the assertions made by management are complete, accurate and free from material mis-statements.

Hope it is clear.

9 Like

(Guest)

Assertion means declaration.................

1 Like

Milind M. Kulkarni (Practicing CA) (580 Points)
Replied 06 February 2012

'Assertions' is the terminology used for various disclosures in the financial statements, which includes revenue, employee cost and so on. The auditor has to evaluate these assertions from various perspectives, such as existence-occurrence (in case of fixed assets/ debtors), completeness (in case of sales/ employee cost or other periodical expenses). These are a few examples of assertions and their evaluations by auditors.

2 Like

prakash (accountant) (26 Points)
Replied 01 May 2014

Assertion is a representation which is ,made by the mangement in the Preparation of the financials .These are called as the management representation and this is different from the audit assertions .We would evaluate the broad representations made by the management in the

following perspectives like occurence ,completeness ,accuracy or valuation or the existence etc,.

1 Like

purushottam (ca student) (22 Points)
Replied 18 October 2015

An assertion is an amount or disclosure existing in the account or FS of an entity which is represented by management and while auditing statutory auditor has to perform specified audit procedure to value, verify its existance,completeness,accuracy, obligation in respect thereof,its presentation in FS.

TRINATHA SENAPATI (STUDENT) (33 Points)
Replied 20 January 2016

We can simply say that it is the information provided by management

2 Like

MD MAJHARUL ALAM (Finance Controller) (38 Points)
Replied 22 January 2016

tHANK YOU VERY MUCH TO ALL ,,, EVEN I WAS CONFUSED FOR THE SAME TERM

1 Like

CA Prateek Garg (CA in Practice) (1444 Points)
Replied 03 February 2016

See it here.......

/forum/details.asp?quote=1472211&mod_id=343665&offset=0#reply

purushottam (ca student) (22 Points)
Replied 24 February 2016

Whether all IND AS is applicale in may 2016 final examination. Them Whats aout current Accounting standerds.

imran khan (Student CA Final ) (22 Points)
Replied 04 February 2017

Very nice explained sir ji...

subhash Rawat (49 Points)
Replied 19 April 2018

Assertions mean balance Jo fs Mai diye Gaye transaction and asset ke unko check karna isliye hum use karte for eg.. for asset & liability existence Matlab balansheet date per exist Kare and transaction ke liye eg.. classification ki voh shi account Mai hai ya ni