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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit procedures and obtaining evidence

An audit team at Orion plc is testing revenue cut-off. The year end is 31 December. The team selects a sample of goods dispatched notes from the last week of December and the first week of January, and traces each to the sales invoice and the period in which the sale was recorded. Which assertion is this procedure primarily addressing?

The procedure primarily addresses cut-off. By tracing dispatch notes either side of the year-end to the invoices and the period of recording, the auditor checks that sales are recognised in the correct accounting period. It does not test price accuracy, classification or general occurrence.

  1. AOccurrence of revenue for the period, regardless of recording date
  2. BCut-off, ensuring transactions are recorded in the correct accounting periodCorrect
  3. CClassification of revenue between product lines
  4. DAccuracy of the prices charged on invoices

Explanation

The procedure compares dispatch dates (when control passes) with the period of recording around the year-end. That directly tests cut-off, an assertion about transactions and events. Occurrence would involve selecting recorded sales and checking they happened, and the procedure does not examine prices or classification.

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