Audit Assertions: Key to Evaluating the Reliability of Financial Statements

In the financial audit, the audit assertions are essential to assess whether the financial statements present reliable and error-free information. These assertions are implicit or explicit statements by the administration when preparing financial information.

According to the ISA 315 and 500, the statements apply to:

• Transactions of the period
• Account balances
• Presentation and revelation

They are the basis of the risk approach, allowing external auditors, internal auditors and general accountants Identify errors, fraud, and design effective controls.

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Key Audit Assertions (CEAVOP)

1. Completeness
   Check that everything that should be registered, is registered.
   Example: Confirm that all invoices and liabilities are included.
2. Existence (Existence)
   Confirms that the recorded balances actually exist.
   Example: Physical inspection of inventories or bank confirmations.
3. Accuracy
   Ensures that the figures are correct and error-free.
   Example: Recalculate interest, depreciation and reconciliations.
4. Valuation
   Check that the balances are valued correctly according to NIF/IFRS.
   Example: Value inventories or adjust foreign currency balances.
5. Ownership (Rights and Obligations)
   He assures that The recorded assets and liabilities correspond to the entity.
   Example: Review property contracts or credit titles.
6. Presentation (Presentation and Revelation)
   Confirms that the information is classified and disclosed correctly.
   Example: Separate restricted cash and disclose appropriately in notes.

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Case Study: Application in Cash and Cash Equivalents

The heading of Cash and Cash Equivalents It is one of the most critical for auditors because of its high liquidity and risk of misuse. Here's how to apply each statement:

1. Completeness
   • Risk: Omit accounts or funds to hide transactions.
   • Proof: Request bank confirmations to all financial institutions and check if they exist unregistered accounts.
2. Existence (Existence)
   • Risk: Record cash that does not exist physically.
   • Proof: Carry out cash audits surprises and confirm balances with banks.
3. Accuracy
   • Risk: Errors in sums, deposits in transit or bank reconciliations.
   • Proof: Review bank reconciliations and recalculate movements.
4. Valuation
   • Risk: Poorly converted foreign currency cash or overvalued equivalents.
   • Proof: Check the conversion with the official exchange rate and the valuation of short-term investments.
5. Ownership (Rights and Obligations)
   • Risk: Register other people's money or seized accounts.
   • Proof: Review bank account contracts and verify usage restrictions.
6. Presentation (Presentation and Revelation)
   • Risk: Incorrect classification that confuses users.
   • Proof: Confirm that cash, restricted accounts and equivalents are properly separated and revealed according to NIF C-1 / IAS 7.

Expected result:
The auditor concludes whether the cash It exists, is complete, correctly valued, belongs to the company and is presented in accordance with the standard..

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Conclusion

From my experience as an auditor at KPMG, I can affirm that Correctly applying audit assertions is a powerful tool for:

• Identify risks in the financial statements
• Mitigate errors and fraud through effective controls
• Ensure regulatory and financial compliance

These statements are valuable not only for external auditors, but also for internal auditors and general accountants, as they strengthen the internal control and they assure reliable financial information for decision-making.

In a world where transparency is essential, Audit assertions are key to building confidence in financial information.