What are audit assertions?


Audit assertions are claims made by management that financial statements are accurate and do not contain any errors. Here, auditors’ work begins and they need to verify and ensure claims made by management are appropriate.

In order to verify management claims/assertions, the auditors perform audit procedures to ensure these management claims are accurate. Further, it’s important to note that auditors need to design and perform audit procedures in line with audit/management assertion.


For instance, an assertion for completeness and existence is applicable on accounts receivables. The auditors need to design and perform audit procedures to verify these assertions, which can be as follow,

AssertionExplanationAudit procedureRisk addressed
ExistenceThis assertion means that all recorded assets of the business actually exist and belong to the business.Auditor can perform physical verification for the assets. Further, ownership documents like purchase invoices, goods receipt notes, and payment documents can be reviewed.Overstatement of the assets.
CompletenessThis assertion reflects that all assets under ownership of the business have been recorded in the financial statement. It can be for other items as well.Do a physical count of the assets, and ensure assets on the floor have been recorded in the ledger/business record.Understatement of the assets.

In the given example, we have discussed two assertions for the audit. Let’s discuss different types of audit/management assertions.

Types of audit assertions

There are two types of audit assertions. These assertions include

1-Transaction level assertions.

2-Account balance assertions.

3-Assertions for the presentation and disclosures.

1-Transaction level assertions (Income Statement assertions)

These assertions are related to overall transaction classes. These classes can be revenue, expenses, and accounts that involve payments like a dividend. These assertions can be explained as follows.

Audit assertionExplanationAudit Procedures
Occurrence                       It means that transactions recorded in the system actually occurred.Supports/documents related to the transaction can be reviewed to ensure the recorded transaction actually occurred.
AccuracyIt means the audit client claims all of the entries recorded in the financial statement are accurate and do not contain an error.The auditor needs to review the system of controls. In addition to this, entries can be vouched.
Cut-offIt’s a management’s claim that transactions have been posted in the correct accounting period.Auditors need to cross-check the date transaction was performed and the date it was posted in the accounting system.
ClassificationIt’s the claim of management that transactions are classified in the correct chart of accounts.The auditor can review if transactions are posted in the correct ledgers by analyzing the chart of accounts on the posting documents. (These documents include payment, receipt, and journal voucher)
CompletenessIt’s a claim from management that they have recorded all the transactions in the accounting system. In other words, they have not missed any transaction.The auditor can cross-check source documents like invoices, GRN, GDN, and ownership documents with accounting system.

2-Account balance assertions (Balance sheet assertions)

These are the assertions that are applied to the account balances. These balances include assets, liabilities, and equity.

Audit assertionsExplanationAudit procedures
Rights and obligationsIt’s a claim from management that they have only recorded assets in the financial statement that they have right over. Similarly, liabilities recorded are present obligations that need to be paid.Auditors can verify source documents for the ownership like legal deeds, ownership entitlement etc. For liabilities, source documents like purchase orders, expenses etc can be reviewed.
ValuationThis is a claim that the audit client has appropriately valued all the assets and liabilities.Auditors can review assumptions /bases used in the valuation.
ExistenceIt’s a management claim all of the assets and liabilities recorded in the financial statement exist in reality. In other words, the assets/liabilities recorded in the financial statement are genuine and actually exist under the ownership of the audit client.Auditors can verify the existence of assets/liabilities by reviewing source documents. Further, physical verification can be a logical choice.
CompletionIt’s a claim from the audit client that they have recorded all the transactions in the accounting system.The auditor can reconcile floor to record transactions/items.

3-Presentations and disclosure

These assertions relate to the income statement and balance sheet as well. So, these assertions apply to both classes of transactions and account balances.

Management assertionsExplanationAudit procedures
UnderstandabilityIt’s a claim from management that the information disclosed in the financial statement can be understood without difficulty.Auditors can assess ease of understanding by reading the disclosures.
CompletenessClaim from management that they have disclosed all material information in the financial statement.Auditors need to review the financial statement and ensure that all material information is disclosed in the financial statement.
AccuracyIt’s a claim from the audit client that all disclosed information is accurate and does not contain error/errors.Auditors need to review disclosures and ensure they are consistent with facts.
ValuationIt means that disclosures made in the financial statement are valued appropriately.The auditor needs to review assumptions in the valuation of notes to the financial statement.


Audit assertions/management assertions are claims made by management regarding the truth and fairness of the financial statement. The auditors need to verify these management claims/assertions. In order to verify the management claims/assertions, the auditors need to design and perform audit procedures.

Different audit assertions include completeness, existence, accuracy, occurrence, valuation, cut-off, rights and obligations etc. Further, some assertions are applicable on the balance sheet and some on the income statement.

Transaction level assertions are applicable on the income statement. On the other hand, account balance assertions are applicable on the balance sheet.  

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