AA – L2 – SA – Q4.7 – Financial Statement Assertions

Identify which financial statement assertion is addressed for each of the below substantive procedures performed on a non-current asset schedule (which agrees to the financial statements).

  1.  Confirming whether the costs on the schedule are correct
  2.  Tracing items from the non-current asset register to the schedule
    A   Existence
     Accuracy and valuation
     Completeness
     Accuracy
     Existence
    F   Completeness

B, E

  Explanation:

  1. Confirming whether the costs on the schedule are correct tests the accuracy and valuation assertion, as it verifies that the recorded amounts are correct (B).
  2. Tracing items from the non-current asset register to the schedule tests the existence assertion, ensuring that assets recorded on the schedule actually exist in the register (E). The combination of B and E matches the procedures to the correct assertions.