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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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