Auditing and Ethics · Audit Evidence

Assertions and Audit Procedures for CA Intermediate Auditing

Updated 4 October 2026 · Fact-checked

Assertions are the claims management makes in the financial statements, such as that transactions occurred or balances exist. You identify the relevant assertion, then choose procedures like inspection, observation, inquiry, confirmation, recalculation, reperformance or analytical procedures to test it. Match each procedure to the assertion it best supports.

Understand Assertions and Audit Procedures

When management prepares financial statements, it is making claims. A balance of ₹10,00,000 for inventory claims that the inventory exists, that it belongs to the entity, that it is complete and that it is valued correctly. These claims are called assertions (SA 315 (Revised 2019)).

The auditor cannot give an opinion on a number without testing the claims behind it. So the auditor uses assertions to decide what could go wrong (a risk of material misstatement) and what evidence is needed to cover it. SA 500 deals with audit evidence and the procedures for obtaining it.

SA 315 (Revised 2019) groups assertions into three sets. First, classes of transactions and events for the period: occurrence, completeness, accuracy, cut-off and classification. Second, account balances at the period end: existence, rights and obligations, completeness, and accuracy, valuation and allocation. Third, presentation and disclosure: occurrence and rights and obligations (a combined assertion), completeness, classification and understandability, and accuracy and valuation.

Once you know the assertion, you choose the procedure. Inspection examines records, documents or physical assets. Observation means watching a process, such as stock counting. External confirmation is a direct written reply from a third party. Recalculation checks arithmetic accuracy. Reperformance is the auditor independently doing a control or procedure. Analytical procedures study relationships and trends. Inquiry means asking informed people, inside or outside the entity.

Procedures are also split by purpose. Tests of controls check whether controls operated effectively. Substantive procedures detect material misstatements and are of two kinds: tests of details and substantive analytical procedures. Inquiry alone ordinarily does not provide sufficient appropriate audit evidence to detect a material misstatement at the assertion level or to test the operating effectiveness of controls.

Key rules to remember

Assertions: classes of transactions and events: Occurrence, Completeness, Accuracy, Cut-off, Classification; Apply to the statement of profit and loss items for the period. Memory aid: OCACC.
Assertions: account balances at period end: Existence, Rights and obligations, Completeness, Accuracy-valuation-allocation; Apply to balance sheet items. Overstatement risk points to existence; understatement risk points to completeness.
Assertions: presentation and disclosure: Occurrence and rights and obligations; Completeness; Classification and understandability; Accuracy and valuation; The first is a combined assertion, so the set has four items. Test whether disclosures are relevant, clear and correctly measured.
Audit procedures to obtain evidence: Inspection, Observation, External confirmation, Recalculation, Reperformance, Analytical procedures, Inquiry; Choose by assertion. Inquiry alone ordinarily does not provide sufficient appropriate audit evidence.
Purpose of procedures: Risk assessment procedures + Further audit procedures (tests of controls and substantive procedures); Substantive procedures = tests of details + substantive analytical procedures.

How to solve Assertions and Audit Procedures questions

Use this method for any question that asks which assertion is tested or which procedure to apply.

1Read the situation and identify whether it concerns a transaction for the period, a balance at the year end, or a disclosure.
2Pick the matching assertion set from SA 315 (Revised 2019).
3Ask the direction of the risk: could the item be overstated (think occurrence or existence) or understated (think completeness)?
4Name the specific assertion, for example cut-off or rights and obligations.
5Choose the procedure that gives the most reliable evidence for that assertion, preferring external or physical evidence over inquiry.
6State how the procedure is performed in the given facts, with the document or party involved.
7Say what result would indicate a misstatement, and conclude.

Quickest way: Direction of test and source of evidence

When to use it: Use for MCQs on matching assertions with procedures, and for short written answers.

For MCQs, find the key word: 'recorded but not real' means occurrence or existence; 'left out' means completeness; 'wrong period' means cut-off; 'owned' means rights and obligations.
Eliminate options with only inquiry when a document, confirmation or physical check is offered.
Match: observation with stock count, confirmation with receivables and bank, recalculation with depreciation arithmetic, inspection with title deeds.
For written answers, use the format: assertion, procedure, how it is done, what it proves. Give one line each.
Use direction: vouching tests from the ledger back to documents for occurrence; tracing from documents to the ledger for completeness.
Write the assertion name in bold so the examiner can award marks quickly.

Common mistakes in Assertions and Audit Procedures

Confusing existence with completeness.
Both seem to be about whether the item is in the books.
Fix: Existence checks that recorded items are real (overstatement). Completeness checks that nothing real is missing (understatement). Test existence from books to evidence; test completeness from evidence to books.
Treating inquiry as sufficient evidence.
Inquiry is easy to write and sounds practical.
Fix: Inquiry supports other procedures but ordinarily does not by itself provide sufficient appropriate evidence. Pair it with inspection, confirmation or reperformance.
Mixing up tests of controls and substantive procedures.
Both involve looking at documents.
Fix: Tests of controls ask whether a control worked. Substantive procedures ask whether the amount or disclosure is misstated. Decide by the objective, not the document.
Mixing the assertion sets, such as using 'existence' for a profit and loss item.
Students memorise one list for everything.
Fix: Use occurrence for transactions and existence for balances. Identify the set first.
Writing only the procedure name without linking it to an assertion.
Students recall techniques but not their purpose.
Fix: Always write 'to test the [assertion] of [item], the auditor will [procedure]'.

Worked examples

Example 1

During the audit of a trading company, the auditor finds that sales invoices dated 29 and 30 March were recorded in the next financial year, which starts on 1 April. Name the assertion affected and state two procedures to address it.

Show the solution

The item is a transaction for the period (sales), so the transaction set applies.
Sales that belong to March are recorded in April, so they are in the wrong period. This is a cut-off assertion issue.
The effect is also understated sales in the current year, but the key assertion is cut-off.
Procedure 1 (inspection): Inspect dispatch records, goods delivery challans and invoices for a few days before and after the year end to see that each sale is in the period in which control passed.
Procedure 2 (analytical procedures): Compare sales for March and April with the same months of the previous year and with the recent monthly trend. An unusually low March and an unusually high April suggest that sales were moved into the new period, so the auditor investigates the difference.

Answer: The affected assertion is cut-off. The two procedures are: (1) inspect dispatch documents and invoices around the year end; and (2) apply analytical procedures by comparing March and April sales with prior-period trends and investigating unusual movements.

Example 2

An auditor wants evidence that trade receivables of ₹8,50,000 shown in the balance sheet are real and are owed to the entity. Identify the assertions and the procedures.

Show the solution

Trade receivables are a balance at the period end, so the balance set applies.
The concern is whether the debts are real: existence. Also whether the entity has a right to collect them: rights and obligations.
Main procedure: send external confirmation requests to selected debtors and ask for direct written replies.
Where there is no reply, use alternative procedures: inspect subsequent receipts from the debtor and inspect the invoices and dispatch documents.
Supporting procedure: inquire from management about disputed or factored balances to check rights and obligations.

Answer: The assertions are existence and rights and obligations. The primary procedure is external confirmation, supported by inspection of subsequent receipts and dispatch documents if there is no reply.

Exam tips

Learn the three assertion sets separately. A common question asks you to name the assertions for a class of transactions, a balance, or a disclosure.
In scenario questions, first name the assertion and then the procedure. This usually earns marks for both.
Remember that 'accuracy, valuation and allocation' is the balance assertion, while 'accuracy' is the transaction assertion.
MCQs often give a procedure and ask which assertion it supports. Think of the direction of test and the source of evidence.
Use the point that inquiry alone ordinarily does not provide sufficient appropriate audit evidence in any discussion answer.

Practice questions from Audit Evidence

Assertions and Audit Procedures: frequently asked questions

How do I remember audit assertions?

Use the three groups. For transactions remember OCACC: occurrence, completeness, accuracy, cut-off, classification. For balances remember ERCA: existence, rights and obligations, completeness, accuracy-valuation-allocation. Disclosures echo these with understandability.

What is the difference between a test of controls and a substantive procedure?

A test of controls checks whether a control operated effectively during the period. A substantive procedure checks whether the amounts or disclosures are materially misstated. Substantive procedures include tests of details and substantive analytical procedures.

Which procedure is best for which assertion?

Observation suits stock existence. Confirmation suits existence of receivables and bank balances. Inspection suits title and documentation. Recalculation suits accuracy. Analytical procedures suit overall reasonableness. Choose by the assertion and the reliability of the source.

What is the difference between recalculation and reperformance?

Recalculation checks the arithmetic accuracy of documents or records. Reperformance means the auditor independently executes procedures or controls that were originally done by the entity, such as re-matching a purchase order to an invoice.