AUD Assertions: How Do You Know Which One the Question Is Testing?
Do not memorize assertions as vocabulary. Ask what could be wrong with this specific account.
Accounts receivable
Existence, valuation, rights, and cutoff can matter. Confirmations can support existence while aging and subsequent collections can help valuation.
Accounts payable
Completeness is often important because omitted liabilities can understate obligations and expenses.
Inventory
Existence, completeness, valuation, and rights can all matter. Observation helps existence and condition while price testing can help valuation.
Revenue
Occurrence and cutoff are often important when management has incentives to overstate performance.
Expenses and liabilities
Completeness becomes especially important when management may want to understate them.
The takeaway
The assertion follows the risk of misstatement, not the account name alone.
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FAQ
Does receivables always mean existence?
No. Valuation and other assertions matter too.
Why is completeness important for liabilities?
Omitted liabilities understate obligations and expenses.
Should I memorize one procedure per assertion?
No. Understand why the procedure addresses the risk.