What are assertions?

What are assertions?

• A. Claims made by directors about elements of financial statements
• B. Auditor's opinion on statements
• C. External confirmations of balances
• D. Internal control deficiencies

Answer: (A)

Assertions are management's representations about the recognition, measurement, presentation and disclosure of items in the financial statements. They are the claims the company makes about the figures and disclosures, such as that assets exist, all liabilities are included, rights to assets belong to the entity, amounts are fairly stated, and items are presented and disclosed correctly. The auditor uses these assertions to plan and perform audit procedures, gathering evidence to support or refute them. This is why the statement describing them as claims made by directors about elements of financial statements is correct. The auditor’s opinion is the final conclusion, external confirmations are evidence obtained, and internal control deficiencies point to control weaknesses, not the definitions of assertions.

Assertions are management's representations about the recognition, measurement, presentation and disclosure of items in the financial statements. They are the claims the company makes about the figures and disclosures, such as that assets exist, all liabilities are included, rights to assets belong to the entity, amounts are fairly stated, and items are presented and disclosed correctly. The auditor uses these assertions to plan and perform audit procedures, gathering evidence to support or refute them. This is why the statement describing them as claims made by directors about elements of financial statements is correct. The auditor’s opinion is the final conclusion, external confirmations are evidence obtained, and internal control deficiencies point to control weaknesses, not the definitions of assertions.