Acca aa s21 Notes

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4. The financial statement assertions
In Chapter 9, we talked about reducing the risks of misstatement to an acceptable level at both the 
financial statement level and the assertion level. Now, we return to look in more detail at what is 
meant by the financial statement assertions.
Essentially a financial statement assertion means whenever a figure appears in the financial 
statements it is making certain claims, proclamations or assertions. It is for example saying, “Here I am, 
I am the receivables figure, and because I am included in the statement of financial position I am 
saying certain things”.
Amounts in the financial statements can say:
๏
A
ccurate.
๏
C
omplete. For example, that all receivables are included.
๏
C
ut-off is correct. In other words, a receivable is present if a sale was made during the financial 
year and not yet paid for.
๏
A
llocated. More to do with expense items that might need to be allocated properly into asset 
amounts (eg overheads included in inventory).
๏
C
lassification and presentation. The transactions giving rise to the receivable have been 
recorded in the proper accounts and are properly presented in the financial statements. For 
example trade receivables are distinguished from other receivables and any non-current portion 
disclosed in the notes.
๏
O
ccurrence. The sales giving rise to the receivable occurred in the period.
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