An independent audit is designed to provide reasonable assurance that the financial statements, taken as a whole, are free from material misstatements and are presented fairly.

The director’s responsibilities in financial reporting as given in the Companies Ordinance are

. to keep proper accounting books and records.

. to prepare financial statements in a true and fair view.

. to prepare and file annual accounts and returns.

. to provide auditors with information and explanation for audit purpose.

Management assertions are implied or expressed representation by management about classes of transactions, account accounts and presentation and disclosures in the financial statements. Auditors use assertions to form a basis for assessing risks of potential misstatements that may occur.

If auditors design audit procedures that meet the transaction-related and balance-related audit assertions, then they can determine management assertions about financial statements are justified. Financial=statement=cycle approach keeps closely related classes of transactions and account balances in the same segment.

The management assertions and its related general transaction-related and balance-related audit assertions are summarised as follows