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Dear Kim,
The answer to the undermentioned question is “C” (extracted from the StudyHub Quiz section), but I am not convinced it should be “C”, because ‘occurrence’ is not an assertion for PPE (an account balance).
My suggested answer is “B”, existence.
The basis for my opinion is:
There is a similar procedure in the Kaplan text in which the testing goes in the same direction – from the sample of additions to the invoices.
Also, when I used the cancellation method to choose the most appropriate answer, rights and completeness are totally wrong, which brings the options down to only occurrence and existence, of which occurrence cannot be the answer, as we are testing an account balance.Please explain why the StudyHub says it’s occurrence.
The QUESTION EXTRACT:
An audit program for plant and equipment includes the following procedure
“For a sample of additions recorded in the non-current asset register agree the details (e.g. description, amount and date) to the purchase invoice.”
Which of the following assertions is tested by this procedure?
A.Completeness
B.Existence
C.Occurrence
D.RightsIt is a common query – the thing to remember is that ADDITIONS are purchases – which are transactions (see Ch12 in the Study Hub s.9.2 starts “Internal controls and tests of controls include those for the purchase cycle …”)
It cannot be existence because that is an assertion for balances “at the reporting date”. (Or “period end” if looking at our summary in Chapter 16 of our notes https://opentuition.com/acca/aa
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