I think you are already familiar with the concept of audit assertion, right?

If not, audit assertion is a guiding

principle or attribute that the auditor considers during the gathering of audit evidence. This is just one of
the basic concepts we learn in our Auditing Theory classes.
These assertions are quite confusing to grasp and understand not only to the accountancy students and
CPA Reviewees but also to practicing CPAs. In fact, applying the concepts of audit assertions in the
actual practice is quite challenging to the practicing CPAs. Nevertheless, these assertions will guide them
in obtaining sufficient appropriate audit evidence to afford sound judgment on the transactions, balances
and disclosures they examine during the course of their audit.
Meanwhile, we will try to develop mnemonics in order for us to easily remember these assertions.
Accordingly, we will divide the audit assertions into three groups, namely: (1) assertions about classes of
transactions and events for the period under audit; (2) assertions about account balances at the period
end; and, (3) assertions about presentation and disclosure. These assertions are further discussed below
together with their assigned mnemonics.
Assertions about classes of transactions and events for the period under audit: (COCAC)
1. Completeness - all transactions and events that should have been recorded have been recorded.
2. Occurence - transactions and events that have been recorded have occurred and pertain to the entity.
3. Classification - transactions and events have been recorded in the proper accounts.
4. Accuracy - amounts and other data relating to recorded transactions and events have been recorded
appropriately
5. Cutoff - transactions and events have been recorded in the correct accounting period.

Assertions about account balances at the period end: (RECV)

1. Rights and obligations - the entity holds or controls the rights to assets, and liabilities are the
obligations of the entity.
2. Existence - assets, liabilities, and equity interests exist.
3. Completeness - all assets, liabilities and equity interests that should have been recorded have been
recorded.
4. Valuation and allocation - assets, liabilities, and equity interests are included in the financial statements
at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.
Assertions about presentation and disclosure: (COCA)
1. Completeness - all disclosures that should have been included in the financial statements have been
included.
2. Occurrence and rights and obligations - disclosed events, transactions, and other matters have
occurred and pertain to the entity.
3. Classification and understandability - financial information is appropriately presented and described,
and disclosures are clearly expressed.
4. Accuracy and valuation - financial and other information are disclosed fairly and at appropriate
amounts.
Let us take for example an account balance pertaining to property and equipment of a certain small and
medium sized enterprise.
Here, we are approaching the audit at an account balance level (there are also other approaches like
transactional level and financial statement level which we will discuss in detail in our succeeding posts).

To obtain sufficient appropriate evidence that the property and equipment account are fairly stated, the
auditor should:
1. Be able to obtain a Transfer Certificate of Title in case of land, vehicle registration in case of
transportation equipment, or Progress Billings and Contract in case of building(Rights and Obligations
Assertion).
2. Be able to physically inspect the land, equipment or building from the Company's asset listing to floor
with the asset number appropriately and physically tagged to the asset(Existence Assertion).
3. Be able to attest that all liabilities incurred and accrued by the entity are recorded in the proper period
through testing of proper ownership of inventories purchased or through testing the adequacy of accrued
warranties expense (Completeness Assertion).
4. Be able to attest the adequacy of allowance for doubtful accounts recognized against the Bank's loans
receivable (in the case of banks and financial institutions) through impairment testing (specific and
collective impairment) or the adequacy of accumulated depreciation recognized against the property and
equipment account through test of reasonableness of depreciation expense account (Accuracy and
Valuation).
Audit assertions are quite difficult to grasp at first. However, once you apply these concepts in practice-you will eventually acquire an in depth understanding on the reason why we name such assertion as such
in the first place. You will realize the importance of these assertions in doing our audit engagements and
in answering theory-based cases and problems we might encounter in the Auditing Problems subject.