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Hi. Pls explain the difference in proving assertions for completeness and occurrence. Take payroll for example.
Tracing hours worked from computer record to calculation of gross wages is ensuring completeness.While, tracing hours worked in wages calculation to computer record is ensuring occurrence.
Agreeing list of employees on wages calculation to details in HR dept is also ensuring occurrence.Where is the line drawn?
Thank you for all answers.
Edit: Does it matter that the qn ask for procedures relevant to occurrence of wages paid?
It is all to do with the direction you are following the transaction. Take your first example:
“Tracing hours worked from computer record to calculation of gross wages is ensuring completeness”.
If the hours are traced this way it is evidence that hours worked have been included in the wages. However, if you went from the wages back to the hours worked record, you would never be able to trace an item that had not made it to the wages: if it’s not in wages, you won’t trace it back so that will not help with completion. It will, however, help with occurrence because you want evidence that wages are based on actual hours worked.
Similarly, tracing form wages to HR record will give evidence of occurrence (or at least that the employee is genuine), but that will not give you evidence that every employee appears on the wages records as, again, a missing employee will not be in the wages records so you will not spot any missed. Completeness would be going from HR records to wage records (all employees should be paid).
I see. So it’s like selecting sample from non current asset register and agree to physical asset to ensure existence, but because wages is transaction balance (p/l a/c), it would be to ensure occurrence. Am i correct to put it this way?
No. It’s nothing to do with whether you are dealing with a transaction or a balance.
If you take a sample from the NCA register and trace to the asset you are gathering evidence about the existence of the asset (or the occurrence of the purchase of that asset). However, that test will tell you knowing about the completeness of the NCA register, because if an item is missing form it you will never pick it to check to the asset.
Tracing from assets to the NCA records will give evidence that the NCA record of the assets are complete. If you pick a new physical asset and cannot find it in the NCA records then you have evidence that the records are not complete.
Hi Ken. Yes, from what i’ve learnt (which seems to be in line with the above), it’s easier to visualize when it comes to PPE, agree physical asset to register = completeness, agree sample of register to physical asset = existence. Am i right?
How about payroll, which is the physical asset and which is the register in this case?
Thank you so much.
Yes for NCA.
Payroll, register would be the payroll record. ‘Physical asset’ is the employee and their hours of work. Every employee and their hours should be be on the payroll records (completeness); each payroll record and payment should be supported by hours worked by the employee (existence).
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