Accuracy
Accuracy is a financial statement assertion and one of the three categories of misstatement that is of concern to
financial statement auditors.
The assertion of accuracy may relate to:
- financial statement items. A financial statement item is accurate when all account balances included in the financial statement item are accurate as to both (i) value and (ii) presentation and disclosure. For example, management may assert that the financial statement item "inventory" is complete, valid and accurate. In relation to the assertion of accuracy, this means that management assert that all account balances included in this financial statement item (e.g. retail invetory, goods in transit, work in progess, provision for obsolescence) are accurate as to both value and presentation and disclosure.
- account balances . An account balance is accurate when all assets, liabilities, equities, revenues and expenses included in the account balance are accurate as to both (i) value and (ii) classification. For example, management may assert that the account balance "retail inventory" is complete, valid and accurate. In relation to the assertion of accuracy, this means that management assert that all assets included in this account balance (e.g. all retail inventory items) are accurate as to both value and classification.
- classes of transactions . A class of transaction is accurate when all economic events included in the class are accurate as to both (i) value and (ii) description. For example, management may assert that the class of transactions known as "purchases transactions" is complete, valid and accurate. In relation to the assertion of accuracy, this means that management assert that all economic events included in purchases transactions (e.g. deliveries of inventory by supplers) are accurate as to both value and description.
On the other hand, a misstatement of accuracy occurs where the assertion of accuracy is not true. For example, when an account balance included in a financial statement item is not accurate as to either value or presentation and disclosure, the account balance, as well as the financial statement item and the financial statements as a whole, are misstated.
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