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CA Intermediate · Auditing and Ethics · Audit Evidence

While auditing Kaveri Textiles Ltd, the auditor wants evidence that a finished-goods stock record is complete, meaning that all items actually held are included in the records. Which of the following procedures best addresses this assertion?

The best procedure is to select items physically seen in the warehouse and trace them to the stock records. This tests completeness because it detects goods that exist but were never recorded. Tracing from records to the warehouse only tests existence, so it cannot find omissions.

  1. ASelect items from the stock records and physically trace them to the warehouse
  2. BSelect items physically seen in the warehouse and trace them to the stock recordsCorrect
  3. CVouch purchase invoices to the ledger for items already recorded
  4. DRecompute the extension of quantity and rate on the stock sheets

Explanation

Completeness is tested by moving from the physical item to the record, so that unrecorded items are caught. Moving from the record to the physical item tests existence, which is the opposite direction and would not reveal omitted stock. Recomputation tests accuracy, not completeness.

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