Such assertions are implicit for each account in the

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Unformatted text preview: alance was $48.9 million. Pause and consider for a moment what assertions the company is making about cash. An obvious answer is that EarthWear’s management is asserting that the cash is really there—that it “exists.” They are also implicitly asserting that all the cash that the company owns is included in the records—in other words, that the financial records are “complete” with respect to the company’s cash. Finally, management is asserting that the cash amount is fairly and accurately recorded, and that no other parties have valid claims to the cash. Such assertions are implicit for each account in the financial statements. For now you just need to understand the general notion that financial statement assertions are management’s expressed or implied claims about information that is reflected in the financial statements. Assertions are central to auditing because they are the focus of the auditor’s evidence collection efforts. In other words, much of what auditors do revolves around collecting and evaluating evidence about management’s financial stat...
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