Management Assertions and Audit Objectives. The following are management assertions (1 through 9). and audit objectives applied to the audit of accounts payable ((a) through (h)).
Management Assertion
1 Existence
2 Rights and obligations
3 Occurrence
4 Completeness
5 Valuation
6 Accuracy
7 Cutoff
8 Understandability
9 Classification
Specific Audit Objective
(a) Existing accounts payable are included in the accounts payable balance on the balance sheet date. (b) Accounts payable are properly classified.
(c) Acquisition transactions in the acquisition and payment cycle are recorded in the proper period.
(d) Accounts payable representing the accounts payable balance on the balance sheet date agree with related subsidiary ledger amounts, and the total is correctly added and agrees with the general ledger. (e) Accounts in the acquisition and payment cycle are properly disclosed according to IASs.
(f) Accounts payable representing the accounts payable balance on the balance sheet date are valued at the correct amount.
(g) Accounts payable exist.
(h) Any allowances for accounts payable discounts is taken.
Required:
A. Explain the differences between management assertions, general audit objectives, and specific audit objectives, and their relationships to each other.
B. For each specific audit objective, identify the appropriate management assertion.