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CA Intermediate · Auditing and Ethics · Audit Evidence

While auditing Sunrise Textiles Ltd, the auditor wants evidence on the completeness of recorded sales. Which procedure is best directed at testing completeness rather than occurrence of sales?

Tracing dispatch records to the sales register tests completeness. Testing must start from the underlying documents and move to the books to find unrecorded sales. Starting from the sales register and going back to documents tests occurrence, which addresses overstatement rather than omission.

  1. ATracing a sample of sales invoices from the sales register to dispatch records
  2. BTracing a sample of dispatch records (goods dispatch notes) to the sales register and invoicesCorrect
  3. CVouching entries in the sales register to customer purchase orders
  4. DConfirming year-end debtor balances directly with customers

Explanation

Completeness tests whether all transactions that occurred were recorded, so the direction of testing must be from the source (dispatch records) to the accounting records. Option A tests occurrence because it starts from the records. Options C and D also begin from recorded items and address occurrence or existence.

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