What Are the Three Audit Assertions That Are Important to Ensuring

Question

Examlex · Accepted Answer

The Answer is The three audit assertions that are important to ensure the auditor has gained sufficient and appropriate audit evidence for sales revenue are occurrence,accuracy and cut-off.Testing of the occurrence assertion needs to ensure that the sales recorded in the general ledger are in fact bona fide sales and have 'occurred'.Substantive tests for the accuracy assertion focus on ensuring that the sales have been recorded at the amount (or value)and have not been overstated.The cut-off assertion is important because there is a risk that an entity will record sales that occur after year-end in the year being audited.The pressure to achieve sales targets and budgets can lead to companies recording sales that occur after year-end in the results prior to year-end.As a result,procedures are designed to test material transactions either side of year-end or all sales in the last week before year-end to ensure that all sales are recorded in the period.

What Are the Three Audit Assertions That Are Important to Ensuring

Definitions: