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Unformatted text preview: blic audit clients. Management Assertions and Financial Statements
We’ve seen that home sellers make a number of different assertions about which
a home buyer might want independent assurance. What assertions does a company that is selling its stocks or bonds make? Some of the most important
assertions entities make to investors are implicit in the entities’ ﬁnancial statements. Immediately after this chapter you will ﬁnd a set of ﬁnancial statements
for EarthWear, a hypothetical seller of high-quality outdoor clothing. We’ll use
EarthWear examples and exercises throughout the book to illustrate important mes25435_ch01_001-032.indd
mes25435_ch01_001-032.indd 10 26/05/11 9:24 PM Conﬁrming Pages Chapter 1 An Introduction to Assurance and Financial Statement Auditing 11 audit concepts and techniques. Let’s consider what assertions EarthWear makes
to potential investors when it publishes its ﬁnancial statements. For example,
EarthWear lists the asset account “Cash” on its balance sheet and indicates
that the account’s year-end b...
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