- This topic has 3 replies, 2 voices, and was last updated 9 months ago by
.
- Posts
Which of the following is an appropriate population from which to select a sample for external confirmation requests for testing the completeness of trade payables?
A. Amounts recorded in the list of individual supplier balances
B Purchase invoices filed in a pending payment file
C. Payees of bank transfers made in the month after the reporting date
D. Suppliers with whom the entity has previously done businessThe answer given for this question is D but here it mentions only the customers with whom they’ve done business in the past and therefore it might not fully represent the completeness of trade payables right?
Could you please clear this doubt ma’am?
Thank you and God bless you!
When testing completeness, you are looking for something that isn’t recorded – so not A and not B.
Although reviewing after-date cash payments and confirming that the liabilities were recorded at the reporting date is a test for completeness, the auditor can’t wait until after the y/e to select a sample (confirmation requests must be sent before the y/e).So by a process of elimination, only D can be correct. This is looking to the “source” of trade payables liabilities – namely “who is the audit client buying supplies from”?
- The topic ‘Payables circulisation’ is closed to new replies.