Auditing presentation and disclosures
How auditors test the presentation assertion: aggregation and disaggregation, relevant and understandable notes, and substantive work on disclosures.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
An audit team can test every balance and still sign off statements that mislead. The figures are right, but a large related-party loan is buried in "other receivables", a material impairment sits inside "operating expenses" with no note, and the accounting policy for revenue describes a business the client stopped running three years ago.
Those are presentation failures. They are not about whether a number is correct but about whether the reader can understand what the numbers say. In smaller audits across South Africa, Nigeria and Kenya, the disclosure review is often a checklist ticked at the end by the most junior person on the team. This article treats it as what it is: audit work on an assertion, with its own evidence.
What ACCA means by aggregation and disaggregation
ACCA describes the financial statement assertions as the claims implicit when directors state that the statements give a true and fair view: attributes that must be true if they are to do so. One of them, under ISA 315 (Revised 2019) as ACCA explains it, is presentation. It means transactions and events are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable in the context of the applicable financial reporting framework.
ACCA defines the two words simply: aggregation is adding individual items together; disaggregation is separating an item or group of items into component parts. The audit question is whether the client has drawn those lines in the right places.
Questions to ask of each line:
- Is anything material hidden inside a total? A large one-off item inside a routine expense line, or a director's loan inside trade receivables.
- Is anything split so finely it distracts? A page of immaterial notes can obscure the one that matters.
- Does the description match the content? "Other income" that is mainly a government grant, or "sundry creditors" that is mainly a tax liability.
- Is the note relevant to this entity? Boilerplate policies for transactions the client never has add length and nothing else.
Disclosures need substantive procedures too
According to ACCA, ISA 330 requires the auditor, whatever the assessed risks, to design and perform substantive procedures for each material class of transactions, account balance and disclosure. Disclosures are named explicitly. A material disclosure cannot be covered by a checklist tick alone.
Substantive work on disclosures looks like:
- Agree narrative facts to evidence. Related-party relationships to registers and minutes; commitments to contracts; contingent liabilities to lawyers' letters.
- Agree figures in notes to audited balances and to the working papers that support them.
- Test completeness. Has every matter that needs disclosure been disclosed? Compare with what the audit found: subsequent events, going concern doubts, related-party transactions identified during fieldwork.
- Read for consistency. Does the directors' report or narrative say anything that contradicts the statements?
Checking custom lines and groups still total into standard lines
In Achekam, a firm can add its own statement lines and groups and change the wording of any row title, and later builds keep those choices. Each custom line still totals into a standard line, so the notes, the cash flow and, for South African clients, the iXBRL tags stay consistent.
That flexibility is what the presentation assertion is about, and it deserves a check. For each custom line or group the client or preparer created, ask:
- Which standard line does it total into, and is that the right home for it?
- Does the new description say what the line contains?
- Has disaggregating it revealed a material item that now needs a note?
A custom line that totals correctly can still be badly described, and description is part of presentation.
Policies and notes left unfinished or labelled for review
Achekam's Studio includes standard accounting policy wording based on IFRS for SMEs, labelled for review before issue, and staff can write their own policies. Notes take their figures from the mapped trial balance; facts the trial balance does not hold are left as "[to be completed]". A line carries a note reference only when that note is in the set.
For the auditor reviewing statements prepared this way, those markers are useful signals:
- any "[to be completed]" left in a draft is an unfinished disclosure, not a typo;
- a standard policy still labelled for review has not been confirmed by a person as matching what the client does;
- a line with no note reference where you expected one means the note is missing from the set.
None of this replaces reading the policies against the client's actual transactions. Our article on accounting policies and notes covers how those are built.
Automated review findings: prompts, not evidence
Staff can run an automated review of a draft in Achekam, which lists findings for a person to accept, resolve or dismiss. It is advice only and does not stop the statements being signed. Separately, the Validation & Math Engine runs fixed, non-AI checks such as double entry and note ties.
Use both to direct your attention. A finding that a note does not tie to the statement is worth chasing. A clean result does not mean the disclosures are complete or understandable; the checks test arithmetic and structure, not whether a reader would grasp what the client owes its directors. See validation and automated review for what each check covers.
A disclosure review routine for small-company statements
- Read the statements start to finish as a reader would, before using any checklist.
- For each line, ask whether anything material is hidden or anything immaterial is distracting.
- Agree every figure in the notes to the audited balance or working paper.
- Agree narrative disclosures to evidence: registers, contracts, minutes, letters.
- Compare with audit findings for completeness: related parties, commitments, contingencies, subsequent events, going concern.
- Confirm policies describe what the client actually does.
- Clear every placeholder and every policy still labelled for review.
- Then run the framework checklist, as a final net, not as the review itself.
ACCA's technical article on assertions sets out each assertion under ISA 315 (Revised 2019), including presentation, with examples of how they translate into audit tests.
On your next file, have the manager read the statements as a reader before anyone opens the disclosure checklist. The presentation problems that matter are usually visible in that first read.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
