In auditing, assertions refer to the claims made by management about the accuracy and completeness of financial statements. These assertions guide auditors in designing tests and selecting samples to verify that the financial information is reliable. The main types of assertions include existence, completeness, accuracy, valuation, and rights and obligations.

For example, in an internal audit of inventory, auditors use audit sampling to test these assertions. To verify existence, auditors select a sample of inventory items recorded in the ledger and physically inspect them to confirm they actually exist in the warehouse. For completeness, the auditor samples purchase orders and traces them to inventory records to ensure all items received are recorded.

To test accuracy and valuation, the auditor reviews a sample of inventory items for correct pricing, depreciation, or obsolescence adjustments. Finally, for rights and obligations, auditors check documentation on a sample of items to confirm the company legally owns the inventory and there are no liens or restrictions.

Through sampling, auditors efficiently test key assertions without examining every transaction. This approach helps ensure financial statements present a true and fair view, increasing stakeholder confidence in the reported data.