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CA Intermediate · Auditing and Ethics · Audit Evidence

While auditing Kaveri Textiles Ltd, the auditor wishes to test the completeness of recorded sales. Which of the following audit procedures is best directed at that assertion?

The best procedure is to select goods dispatch records and trace them to the sales register and invoices. Completeness requires testing from source documents to the books, so unrecorded sales are detected. Testing from the sales register to dispatch records only checks occurrence and would miss omitted sales.

  1. ASelect sales invoices from the sales register and vouch them to dispatch records
  2. BSelect dispatch records (goods dispatch notes) and trace them to the sales register and invoicesCorrect
  3. CConfirm year-end trade receivable balances with customers
  4. DRecompute depreciation on the factory plant

Explanation

Completeness tests whether all transactions that should have been recorded were recorded, so the direction of testing must be from source documents (dispatch notes) to the accounting records. Option A tests occurrence or existence of recorded sales, which is the opposite direction. Confirmation of receivables mainly addresses existence of balances, and depreciation recomputation is unrelated.

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