Auditing - PCOAB vs ASB Assertions

The video tutorial explains management's assertions over financial statements, focusing on the assertions used by the Public Company Accounting Oversight Board (PCOB) and the Audit Standards Board (ASB). It highlights the differences between the two, such as the inclusion of 'cut off' and 'classification and understandability' in ASB assertions. The tutorial also discusses key questions auditors might ask to test these assertions, covering aspects like existence, completeness, valuation, rights and obligations, and presentation and disclosure.

Which of the following is NOT an assertion according to the PCOB?

• Classification

• Occurrence

• Existence

• Valuation

What is a key question auditors might ask to verify the existence assertion?

• Do the assets on the balance sheet exist?

• Are all transactions recorded?

• Are disclosures complete?

• Is the value of inventory correct?

How do auditors test the cut-off assertion?

• By confirming the value of assets

• By ensuring transactions are recorded in the correct period

• By verifying legal ownership

• By checking if assets exist

Which assertion is concerned with the legal ownership of assets?

• Completeness

• Rights and Obligations

• Valuation

• Presentation and Disclosure

What is a key question related to presentation and disclosure?

• Are all transactions recorded?

• Do the assets exist?

• Are disclosures complete and reasonable?

• Is the value of inventory correct?