Management Assertions. Your audit manager has asked you to explain the PCAOB assertions by using an account on the balance sheet at your audit client. For the accounts receivable account, please define each of the PCAOB assertions, using the accounts receivable account as a way to illustrate each assertion. You are encouraged to reference Exhibit 1.5 to help you answer this question.

EXHIBIT 1.5 Management Assertions ASB Assertions (3) (1) (5) (2) Assertions about Events and Transactions Occurrence (4) Assertions about Presentation and Footnote Disclosures Occurrence Assertions about Account Balances Existence PCAOB Assertions Existence or occurrence Key Questions Do the assets listed really exist? Rights and obligations Rights and obligations Rights and obligations Completeness Completeness Completeness Did the recorded sales transactions really occur? Does the company really own the assets? Are all legal responsibilities to pay the liabilities identified? Are the financial statements (including footnotes) complete? Were all transactions recorded? Are transactions included in the proper period? Are the accounts valued correctly? Completeness Cutoff Accuracy Valuation or allocation Valuation and allocation Accuracy Valuation and allocation Classification Classification Presentation and disclosure Are expenses allocated to the period(s) that were benefited? Were all transactions recorded in the correct accounts? Are the disclosures understandable to users? Understandability