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Meaning of 'Assertion level'?

CA Abhishek Singh (practice) (2111 Points)

27 September 2011

dear everyone,

please some one explain me the meaning of the term "assertion level".

what it means for the following sentence.

audtor should assess the risk of material misstatement at "assertion level"

explanation with an example will be highly appreciated.

waiting urgently for your reply.

Thanks in advance

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11 Replies

Pranab M. Rajbanshi (Articled assistant) (30 Points)
Replied 27 September 2011

rtions as (1) EXISTENCE:means asset & liability exist at the balace sheet date. (2) RIGHTS & OBLIGATIONS: means assets are right of entity and the liabilities are the obligationsof the entity on balance sheet date.(3) OCCURENCE: that transaction & events actually tookplace.ASSERTION: These are the implied messages about the economic realitiesof the entity which management conveys to the users through the financial statements. these are implied and not expressly stated. AAS-5 has listed out these assertions as (1) EXISTENCE:means asset & liability exist at the balace sheet date. (2) RIGHTS & OBLIGATIONS: means assets are right of entity and the liabilities are the obligationsof the entity on balance sheet date.(3) OCCURENCE: that transaction & events actually tookplace.

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Pranab M. Rajbanshi (Articled assistant) (30 Points)
Replied 27 September 2011

(4)COMPLETENESS:there are no unrecorded assets&liabilities on transaction date.(5) VALUATION: that these are recorded at appropriate carrying value. (6)MEASUREMENT: that these are recorded at proper value& revenue allocated to proper period. (7)PRESENTATION & DISCLOSURE: in accordance wid acceptable accounting policies & legal requirements.

Pranab M. Rajbanshi (Articled assistant) (30 Points)
Replied 27 September 2011

**further for understanding "Auditors risk assessment at the level of assertions made in the financial statements."points (A)&(B) needs special attention. ** AAS-6 requires that assessment of inherent risk (intolerable) should be done by the auditor (A) at the level of financial statements in developing overall audit plan. :- factors to be considered while assessing inherent risk at level of financial statements.-Managements integrity, -managements experience & knowledge, -change in management etc.

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Pranab M. Rajbanshi (Articled assistant) (30 Points)
Replied 27 September 2011

(B) At the level of assertions made in financial statements at the time of developing audit program. The auditor should relate assessment made in(A) above to material account balances & classes of transactions at the level of assertions made in fin.statements. *factors to be considered while assessing at level of assertions - quality of accounting system,- ac which require prior period adjustments,- ac involving high degree of estimation,- complexity of underlying transaction,- degree of judgement involved.

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ARUN KUMAR (Financial Consultant ) (992 Points)
Replied 27 September 2011

i will updating it soon...........

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Aakash (Stud) (38 Points)
Replied 03 October 2011

assert:- state a fact or belief confidently and forcefully

assertion:- Management asserts financial statements are correct with regard to existence or occurrence of assets, liabilities or transactions, completeness of information in the financial statements, rights and obligations at a point in time, appropriate valuation or allocation, presentation, and disclosure.

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Frost (Accountant) (21 Points)
Replied 27 October 2011

Thanks for the explanantion :)

B S Somesh (Student CA Final ) (36 Points)
Replied 25 February 2016

Material Misstatement at Financial Statement Level can be compared to WINDOW SHOPPING and Material Misstatement at Assertion Level can be compared to REALLY GOT INTO THE SHOPE TO PURCHASE AND FEEL THE QUALITY ETC., OF A PARTICULAR ITEM.

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CA Prateek Garg (CA in Practice) (1447 Points)
Replied 26 February 2016

According to SA 315, Auditor is required to identify and assess the risk of material misstatement at following levels –

A. At the financial statement level and

B. At the assertion level for Class of transaction, A/c balance and disclosure.

Meaning of Assertion

Assertion is 'representation by management in the financial statement'. For E.g. when you see Rs. 500000/- against Fixed Asset in Balance sheet it is an assertion made by management. likewise all the balances in Balance sheet, Profit and Loss A/c or disclosures made in notes are various assertions made by management.

Meaning of Risk at Financial Statement Level and Assertion Level

1. Those Risk which can affect the all the assertion made in the financial statement are Risk at Financial Statement.

2. Those risks which affect any assertion in particular (and not entire financial statement) are Risk at Assertion level

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