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What are management assertions?

What are management assertions? How do they affect the financial statements? How does the auditor formulate audit objectives based on management assertions?

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Hi there,

Here is some information for you regarding management assertions in the context of an audit:

Management assertions

There are two categories [fn] of assertions by management that are of particular concern to auditors:

* internal control assertions, and
* financial statement assertions.

Internal control assertions
Management is responsible for the internal control procedures it establishes. There is an implied assertion by management that such internal control procedures are effective as to both their design and operation.
Financial statement assertions
(including account balance and class of transaction assertions)

Auditors are not responsible for the preparation of the financial statements of an entity. This is the responsibility of management. The financial statements prepared by ...