- June 6, 2021 at 1:24 pm #623440james8500Participant
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- Replies: 9
Describe substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to the COMPLETENESS of Airsoft Co’s trade payables and accruals.
1. For a sample of purchase orders, trace through to the GRN, purchase invoice and corresponding liability in the payables ledger.
2. Conduct a sequence check on all purchase invoices entered during the year, identifying any gaps in the sequence and investigating with management.
3. Identify the last matched GRN with a purchase invoice and for a sample of unmatched GRN’s raised around the year end, trace through the corresponding entry in the accruals balance.
The solution does not mention any of these as tests of completeness. Are they not? Would I get any marks in the exam for those answers?
Please can someone advise me on this. ThanksJune 6, 2021 at 2:27 pm #623450Kim SmithKeymaster
- Topics: 100
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I cannot provide a marking service bit I will make some points. POs are irrelevant – it is the receipt of goods that “triggers” a liability. See the 4th bullet on page 91 of the notes – if there’s no invoice there must be an accrual – you touch on this in 3 though there you are describing cut-off on the transactions rather than completeness of the liability.
Whereas sales invoices are generated by the entity (so sequentially numbered), purchase invoices are raised by individual suppliers – there is no sequence to check.
Remember for completeness you are looking for what is NOT recorded rather than what is – which is what makes payment after the reporting date that may evidence liability at the reporting date so important.
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