Indirect effect illegal acts: Most of the time illegal acts affect indirectly. Suppose, if company violates environment protection laws which harmful for organization reputation.
3. Management assertions: it is a representation by management about class of transactions and the related account in the financial statement. Management assertions are directly related with IFRS. The assertion is kind of criteria which used as record disclosing information.
1. Existence: Assertions is a kind of deal where assets, equities, liabilities are existed in balance sheet date or not. During the accounting period the transactions are occurred are not it’s main concern of assertions. The completeness of assertions deals with the opposite matters. The completeness of assertions concerned about the possibility of items that should be included,
2. Competence: Management assertion claims that all transactions that presented financial statement of not.
these management assertions deal with whether assert are the rights of the entity and liability are the obligations of the entity at a given date. ex : management asserts that asset are owner by the company or that amounts capitalized for leases in the balance sheet represent the cost of the entity right to leased property and that the corresponding lease liability represent an obligation of the entity
5. Presentation and disclosure: These assertions deal with whether components of the financial statement financial statement are properly combined or separated, described and disclosed. ex: management assert that obligations classified as a long-term liability in the balance sheet will not mature within 1 year.