A relevant assertion is any assertion that has a reasonable possibility of containing a misstatement that would cause a client’s financial statements to be materially misstated. As such, these assertions have a meaningful bearing on whether an account is fairly stated. Thus, not all assertions pertaining to a particular account balance will always be relevant from the perspective of the auditor. For example, the valuation assertion is not relevant when dealing with a cash account, except in cases where foreign currencies are involved. Along the same lines, valuation is always relevant to the allowance for doubtful accounts, but not to the gross trade receivables account.
The auditor should develop substantive procedures for every relevant assertion pertaining to each material class of transactions, account balances, and disclosures. This requirement is based on the fact that the auditor’s assessment of risk is inherently judgmental, and so it may not identify all risks of material misstatement.