Auditing Standard No 15

Home » Auditing Standard No 15

management assertion

The PCAOB’s Auditing Standard number 5 is the current standard over the audit of internal control over financial reporting. Accounting are implicit or explicit claims made by financial statement preparers. These assertions attest that the preparers abided by the necessary regulations and accounting standards when preparing the financial statements.

The assertion of existence is the assertion that the assets, liabilities, and shareholder equity balances appearing on a company’s financial statements exist as stated at the end of the accounting period that the financial statement covers. Put simply, this assertion assures that the information presented actually exists and is free from any fraudulent activity. The concept is primarily used in regard to the audit of a company’s financial statements, where the auditors rely upon a variety of assertions regarding the business. The auditors test the validity of these assertions by conducting a number of audit tests.


This SEC practice is designed to limit excessive automated searches on and is not intended or expected to impact individuals browsing the website. Gain unlimited access to more than 250 productivity Templates, CFI’s full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more. Use Sprinto to centralize security compliance management – so nothing gets in the way of your moving up and winning big.

  • Each also provides the assertion meaning or definition to help one understand how each is used in an assessment.
  • Auditors will employ a wide variety of procedures to test a company’s financial statements with respect to each of these assertions.
  • The training activity and mini case may also be useful in graduate level and advanced auditing courses as a review or warm-up assignment.
  • The valuation assertion is used to determine that the financial statements presented have all been recorded at the proper valuation.
  • A lot of work is required for an organization to support the assertions that a management team makes.

There are five different financial statement assertions attested to by a company’s statement preparer. These include assertions of accuracy and valuation, existence, completeness, rights and obligations, and presentation and disclosure. As noted above, a company’s financial statement assertions are a company’s stamp of approval—that the information in its financial statements is a true representation of its financial position. This includes any information on the balance sheet, income statement, and cash flow statement, and pertains to each and every asset and liability that appears on these forms. This assertion attests to the fact that the financial statements are thorough and include every item that should be included in the statement for a given accounting period.

Audits don’t have to be scary

Many professionals review and test the authenticity of this assertion by using certain checklists. This helps ensure that the financial statements in question comply with accounting standards and regulations. Organizations of all sizes and types, from megacorporations to small businesses to nonprofits, prepare financial statements they are obliged to prepare and present as transparently and accurately as possible when audited. Public companies, for example, are required by law to have an annual audit of their financial statements.