UNCLASSIFIED
Department of Finance
Financial Statements Better Practice Guide
Example: Financial statement assertions
Example: Financial statement assertions
Foreword
The following is a summary of assertions regarding the recognition, measurement,
presentation and disclosure of the various elements of the financial statements.
In representing that, the financial statements have been prepared in accordance with
the applicable financial reporting framework, management and those charged with
governance implicitly or explicitly make these assertions.
Management and those charged with governance rely on the entity’s internal controls
and specific advice from the CFO and other senior managers on the integrity of entity
processes to be satisfied that these assertions are valid in the preparation of the
entity’s financial statements.
Assertions in relation to classes of transactions and events for the period under audit:
Assertion Description
Occurrence Transactions and events that have been recorded have occurred and pertain to
the entity.
Completeness All transactions and events that should have been recorded have been recorded.
Accuracy Amounts and other data relating to recorded transactions and events have been
recorded appropriately.
Cut-off Transactions and events have been recorded in the correct accounting period.
Classification Transactions and events have been recorded in the proper accounts.
Compliance Transactions and events have been carried out in accordance with applicable
laws, regulations or other authority. (relevant to public sector entities)
Assertions in relation to account balances at period end:
Assertion Description
Existence Assets, liabilities and equity interests exist.
Rights and obli- The entity holds or controls the rights to assets, and liabilities are the obligations
gations of the entity.
Completeness All assets, liabilities and equity interests that should have been recorded have
been recorded.
Valuation and al- Assets, liabilities, and equity interests are included in the financial report at appro-
location priate amounts and any resulting valuation or allocation adjustments are appropri-
ately recorded.
UNCLASSIFIED
Department of Finance
Financial Statements Better Practice Guide
Example: Financial statement assertions
Assertions in relation to presentation and disclosure:
Assertion Description
Occurrence and Disclosed events, transactions, and other matters have occurred and pertain to
rights and obli- the entity.
gations
Completeness All disclosures that should have been included in the financial report have been
included.
Classification Financial information is appropriately presented and described, and disclosures
and understand- are clearly expressed.
ability
Accuracy and Financial and other information are disclosed fairly and at appropriate amounts.
valuation
Source: Adapted from the Australian Auditing Standard ASA 315 Identifying and Assessing the Risks
of Material Misstatement through Understanding the Entity and its Environment.
