Assertions in Auditing

Companies and business report their performance for a period using financial statements. When preparing these statements, their management makes several claims. During the audit process, auditors must verify those claims. Based on this verification, they must reach a conclusion in the form of an audit opinion. This process relates to the concept of assertions in auditing.

What are Assertions in auditing?

Assertions are claims made in the financial statements. In most cases, these include two statements, namely the balance sheet and the income statement. Each of them holds specific information. In the case of the balance sheet, it involves account balances at a specified time. On the other hand, the income statement reports financial transactions for a particular period.

Essentially, assertions are claims to establish whether the financial statements are true and fair. These claims are crucial in preparing financial statements. The audit report concludes if financial statements present a true and fair view. Therefore, auditors must examine the assertions made in the financial statements. Based on that examination, they can prepare their audit report.

What are the types of Assertions in auditing?

The types of assertions in auditing fall under two categories. These include claims relating to account balance and transactions and events. In some cases, they may also involve a third category which generalizes assertions for disclosures and presentation. However, they usually get classified under the former two categories.

The assertions under each category are below.

Account balances

There are six assertions related to account balances and related disclosures at the period end. As mentioned above, these apply to the balance sheet. An explanation of what each of these assertions involves is as below.

Accuracy, valuation, and allocation

This assertion includes three claims as follows.

  • Account balances in the financial statements are reported at appropriate amounts.
  • Any resulting valuation or allocation adjustments have been appropriately recorded.
  • The related disclosures have been appropriately measured and described.


Account balances have been recorded in the proper accounts.


All account balances reflect amounts that should have been recorded.


All account balances actually exist.


The descriptions and disclosures of account balances are relevant and easy to understand

Rights and obligations

The reporting entity holds or controls the rights to assets, and liabilities include obligations of the entity.

Transactions and events

There are six assertions related to transactions and events and related disclosures for a period. Unlike the above, these claims relate to the income statement. An explanation of each of these assertions is below.


Amounts and other data have been recorded to reflect the appropriate amounts for transactions.


Transactions and events have been recorded in the proper accounts.


All transactions and events reflect amounts that should have been recorded.


Transactions and events reflect the correct accounting period to which they relate.


The recorded and disclosed transactions and events have actually occurred and relate to the entity.


The descriptions and disclosures of transactions and events are relevant and easy to understand


Assertions are claims made by the management when preparing financial statements. These claims are critical in reporting information to reflect a true and fair view. In auditing, assertions are crucial for auditors to conclude their opinion of the financial statements. These assertions differ based on the type of information. Usually, they fall under assertions for accounts balances and transactions and events.

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