Management Assertions
The implicit or explicit representations management makes in the financial statements, such as existence and completeness.
AUD items almost always make you match a procedure to the assertion it actually tests, and the favorite trap is direction of testing: tracing from source documents forward into the ledger tests completeness (understatement risk), while vouching from the ledger back to support tests existence/occurrence (overstatement risk). The “tell” is which population you start from. Item-writers split assertions into three groups: classes of transactions (occurrence, completeness, accuracy, cutoff, classification), account balances (existence, completeness, valuation/allocation, rights and obligations), and presentation and disclosure (occurrence and rights, completeness, classification/understandability, accuracy/valuation). (SAS 145 now folds disclosures into the other two, but most banks still teach the three buckets.)
Don’t confuse the assertion (what management claims) with the audit evidence that tests it or the internal control that should prevent the misstatement — the procedure links them. Classic error: picking “existence” when the risk is omitted liabilities, which is completeness. Hook: “Existence = is it real? Completeness = is it all there?” Confirming receivables tests existence and rights, not completeness.
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