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CA Intermediate · Auditing and Ethics · Audit Evidence

In the audit of Bharat Logistics Ltd, the auditor needs evidence on the completeness of recorded liabilities at year end. Which procedure is most directly relevant to this assertion?

Examining payments made after year end and invoices received after the balance sheet date is the most relevant procedure, because it searches for liabilities not yet recorded. This tests completeness, whereas vouching already recorded items tests existence or occurrence.

  1. AVouching recorded purchase invoices back to goods received notes
  2. BExamining payments made after year end and unrecorded invoices received after the balance sheet dateCorrect
  3. CInspecting fixed assets at the warehouse
  4. DConfirming the bank balance with the bank

Explanation

Completeness of liabilities concerns whether all liabilities have been recorded, so the auditor searches for unrecorded items, such as subsequent payments and invoices received after year end. Vouching recorded items tests occurrence or existence, not completeness. Inspecting assets and bank confirmation address other assertions.

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