Relevant Assertions
Examples of Disclosures
Name the Pitfall
Identifying Disclosures
100
This assertions states that all disclosures that should have been included in the financial statements have been included
What is completeness?
100
Discusses business relationships that are not arm's length. This disclosure is required by the SEC.
What are related party transactions?
100
Addressing each disclosure in our working papers that addresses our assessment of risk.
What is not identifying the relevant controls for each disclosures?
100
Some disclosures controls are common or pervasive, so we use this to make sure we address them all -- it fills in the "GAAP"
What is a GAAP Checklist?
200
These assertions state that financial and other information are disclosed fairly and at appropriate amounts.
What are accuracy and valuation?
200
This document discusses significant accounting policies, e.g. policies related to revenue recognition or receivables
What is the summary of significant accounting policies?
200
Clearly distinguishing in our documentation our tests of relevant controls from our substantive procedures.
What is insufficient documentation of the dual purpose test?
200
The data for these types of disclosures are not maintained in the general ledger -- go ask general counsel.
What are legal disclosures?
300
These assertions state that financial information is appropriately presented and described, and disclosures are clearly expressed.
What are classification and understandability?
300
A disclosure that summarizes significant obligations the company has through its financing (think bonds and loans).
What is a debt disclosure?
300
Considering and documenting the history of disclosure errors in the past, as well as competence of the person preparing & reviewing the disclosures.
What is failing to properly assess the effectiveness of controls?
300
This balance sheet account footnote is derived from data within the general ledger. (Hint: it involves raw materials).
What is the inventory footnote?
400
These assertions state that disclosed events, transactions, and other matters have occurred and pertain to the entity.
What are occurrence and rights and obligations?
400
A discussion of the accounting policies and amounts related to useful lives of tangible assets and the net value of those assets.
What is the Property, Plant, and Equipment disclosure?
400
Documenting the source of the underlying data & cross reference if any testing has been performed.
What is failing to identify & cross reference to controls already tested?
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