Final answer:
The auditor must identify the relevant assertions by determining the source of likely potential misstatements for each significant. True.
Step-by-step explanation:
The statement is true. When conducting an audit, the auditor must identify the relevant assertions by determining the source of likely potential misstatements for each significant account or transaction. This involves understanding the risks and potential errors that can occur in financial statements and assessing whether there are appropriate controls in place to mitigate those risks.
For example, if the auditor identifies the revenue recognition as a significant financial statement assertion, they would analyze the revenue recognition process and determine the potential sources of misstatements, such as incorrect timing or amount of revenue recognition.