PCAOB Management Assertions

Existence or Occurence
Do the assets really exist?
Did the recorded sales transaction really occur?
Example of testing existence and occurrence
Send confirm to bank for cash (existence)
Look at receipt for an asset, see if asset exists
Rights and Obligations
Does the company really own the assets?
Are related legal responsibilities identified?
Example of testing rights and obligations
Does CCU have the title for their company cars?
Does CCU have record of payments owed to car company?
Completeness (Cutoff)
Are F/S complete?
Were all transactions recorded?
Are transactions at beginning or end of period included in proper period?
Example of testing completeness
Test is payable are understated.
1. confirm with outside companies to see how much audit owes.
2. Check cutoff to see if payables are recorded in proper period.
3. look through CDJ to see who the company is paying
4. Look at Board minutes to see if they approved any major liabilities that have not been logged in F/S.
Valuation or Allocation
Are the accounts valued accurately?
Are expenses allocated to the periods benefitted?
Example of valuation or allocation
Recalculate depreciation on multiple assets to determine if company is valuing correctly.
Presentation and Disclosure
Were all transactions recorded in correct accounts?
Are the disclosures understandable to the users?
Example of presentation and disclosure
Scan disclosures for inaccurate information