Question

What tools do auditors use to verify the ending balances in the various accounts in the acquisition and payments cycle?

Answer 1

Account balance assertions. The following four items are classified as assertions related to the ending balances in accounts, and so relate primarily to the balance sheet:

• Completeness. The assertion is that all reported asset, liability, and equity balances have been fully reported.
• Existence. The assertion is that all account balances exist for assets, liabilities, and equity.
• Rights and obligations. The assertion is that the entity has the rights to the assets it owns and is obligated under its reported liabilities.
• Valuation. The assertion is that all asset, liability, and equity balances have been recorded at their proper valuations.