Assertions

Question 1

What are the best procedures to test Existence?

Answer 1

🔹 Existence

“Does it really exist?”

Best procedures
• Confirmations (AR = king)
• Physical examination (inventory, PP&E)
• Vouching from records → source documents

🚫 Weak for existence: inquiry alone, analytics

Question 2

What are the best procedures to test Completeness?

Answer 2

🔹 Completeness

“Did we record everything?”

Best procedures
• Tracing from source documents → GL
• Review activity just after year-end
• Cutoff testing

🚫 Confirmations are usually weak here (classic trap)

Question 3

What are the best procedures to test Valuation?

Answer 3

🔹 Valuation / Allocation

“Is it recorded at the right amount?”

Best procedures
• Recalculation
• Reperformance
• Reviewing subsequent events (AR collectability)
• Aging schedules

Question 4

What are the best procedures to test Rights and Obligations?

Answer 4

🔹 Rights & Obligations

“Do they own it (or owe it)?”

Best procedures
• Inspect contracts, titles, lease agreements
• Confirm terms with third parties

Question 5

What are the best procedures to test Presentation and Disclosure?

Answer 5

🔹 Presentation & Disclosure

“Is it classified and disclosed properly?”

Best procedures
• Reading financial statements and footnotes
• Comparing to GAAP disclosure checklists