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CA Intermediate · Auditing and Ethics · Audit Evidence

While auditing Sundaram Textiles Ltd, the auditor wants evidence that all goods dispatched during March were actually billed. Which test best addresses this completeness assertion for revenue?

The best test is to select goods dispatch notes and trace them to sales invoices and the sales ledger. Completeness concerns unrecorded items, so testing must begin from the underlying events, namely dispatches, and move to the accounting records. Starting from recorded sales tests occurrence instead.

  1. ATrace a sample of sales invoices to the dispatch records
  2. BTrace a sample of goods dispatch notes to the related sales invoices and the sales ledgerCorrect
  3. CVouch a sample of sales ledger entries to the supporting sales invoices
  4. DConfirm year-end debtor balances directly with customers

Explanation

Completeness asks whether all dispatches were recorded. The test must start from the dispatch records (the population of actual events) and trace forward to invoices and the ledger. Starting from invoices or ledger entries tests occurrence (overstatement), not completeness. Debtor confirmation mainly addresses existence of receivables.

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