Reference no: EM132833195

In reviewing the primary assertions embodied in financial statements, you should note that conclusions as to the validity of each assertion should be based on different types of evidence. Contrasting Existence/Occurrence with Completeness, it should be apparent that one relies on evidence supporting that the recorded item exists (balance-related objective) or has occurred (transaction-related objective) while the other relies on evidence that there isn't something that has occurred that is being hidden, or is not being recorded.

Problem 1: Where should the emphasis be within an audit? For example, in a financial statement audit, on items such as accounts receivable and sales, it is more likely that something that has been recorded should not have been; on the other hand, it isn't likely that your client is making sales and not recording them (this may be just the opposite on a tax return audit if you are an IRS agent). On accounts payable, you're usually not concerned about what has been recorded; your issue is what has not been reported.

Problem 2: What are two or three areas (accounts) in a financial audit and what types of evidence that you feel should be collected?