Skip to content

CA Intermediate · Auditing and Ethics · Audit of Items of Financial Statements

While auditing Kaveri Textiles Ltd, the auditor selects a sample of fixed-asset additions and examines the supplier invoices, the board approval and the payment through bank. Which assertion is MOST directly addressed by this procedure?

The procedure addresses occurrence. Tracing recorded additions to supplier invoices, board approval and bank payment confirms that the additions actually happened. Completeness would require testing in the reverse direction, from physical assets or purchase records into the register, so that option is not correct.

  1. AOccurrence of the additions recorded during the yearCorrect
  2. BCompleteness of the fixed assets register
  3. CClassification of assets between current and non-current
  4. DRights and obligations relating to leased assets

Explanation

Vouching recorded additions back to invoices, approvals and payments tests whether the recorded items actually took place, which is the occurrence assertion. Completeness is tested in the opposite direction, from physical assets or source documents to the register. Therefore the completeness option is wrong for this direction of testing.

Did you get it right without looking?

One question tells you little. A timed set on Audit of Items of Financial Statements shows your real accuracy, how long you take and where you lose marks.

Practise Audit of Items of Financial StatementsFree diagnostic mock

More Audit of Items of Financial Statements questions