Audit Assertions, Key Assertions at Risk, Substantive Audit Procedures, and Key Audit Matters

Audit
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University
Date: 11th Sep 2018.
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Audit assertion:
Audit assertion are the declaration and assumptions made by the management with
respect to the disclosures and information reported in the financial statements. The
representation mainly includes the matter of recognition, measurement and fair
presentation of financial data (Bromwich & Scapens, 2016). These are known also known
as Management Assertions and Financial Statement Assertions. As per the presentation and
disclosure of financial data and after considering risk of misstatement the audit assertion
are divided into several groups namely, occurrence, completeness, accuracy, completeness,
existence, valuation, rights and obligation, valuation, and classification. Fundamentally the
main role of these assertions are to support the auditor in interpreting the audit issues and
provide the measure to resolve them. The major assertion related to balance sheet are
classified into four broad categories namely, completeness, accuracy, valuation and rights
and obligation (Dichev, 2017).
1 a) Key assertions at risk
Valuation: As per accounting standard principles inventories to be valued at cost or
net realizable value whichever is lower. At the time of valuation of inventories it is
necessary to deduct the any type of abnormal loss or wastage to get the fair valuation of
inventories. One of the major issue related to valuation is value the inventory when the
goods are at work in progress stage. And the another complexity is like here Computing
Solutions Limited, sell computer presentation package, but due of technology and many
other reasons the merchandise get obsolete within a very short period of time and hence
the value of goods gets depreciated drastically (Félix, 2017).
Rights & Obligation: This assertion talks about the ownership and rights of the
entity with respect to inventory. Here in the given case the company Computing Solutions
generally following a practice of moving its inventory from the central warehouse to the
regional warehouse, and the number of regional warehouses are six. So here is it difficult to
ascertain whether the goods are in transit or are held on consignment basis. Hence, due to
involvement of many parties like the insurance company, the transporter and the
consignee it become more important to understand the criteria relating to ownership and
rights in the given situation (Grenier, 2017).
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