How would you select a sample to test the completeness assertion for sales? Would the sample used to test the occurrence assertion be effective for testing the completeness assertion?
What will be an ideal response?
The completeness assertion relates to whether transactions that occurred are recorded. As a result,
a sample used to test the occurrence assertion would not be effective for testing the completeness
assertion given the occurrence assertion relates to whether recorded transactions represent events that
actually occurred (i.e., opposite of completeness). To test the completeness assertion, the auditor might
select confirmations of deposits made at the bank during the year and determine if those deposits are
supported by Daily Sales Sheets that also are supported by records of the cash, debit, and credit card
sales transactions and then the auditor would determine that the amounts were correctly included
in the General Ledger for those days. The concern about completeness is unrecorded sales (e.g., sales
clerks collect cash from customers but never record the sale). If the auditor identifies noticeable
differences in the perpectual inventory records and inventory counts during inventory observations
whereby perpetual records are consistently higher than actual inventory counts, the auditor's concern
about unrecorded sales or theft of inventory would be heightened. Similarly, unusual differences from
expectations related to analytical procedures performed for inventory and sales may indicate possible risk of sales not being recorded.
You might also like to view...
Multiple parties at the negotiation table often leads to coalitions of negotiators who align with each other in order to win the negotiation.
Answer the following statement true (T) or false (F)
Why would a producer use wholesalers rather than sell directly to retailers or consumers?
What will be an ideal response?
When an insider discloses material insider information to a noninsider tippee, the tipper is liable
for: A) The profits of both the immediate tippee and the profits of any remote tippees. B) The tipper's own trading only. C) The tippee's profits, but not the profits made by any remote tippees. D) The profits of all traders during the period before the information became public.
Ruby Corporation has announced plans to liquidate. Bronze Corporation owns 85% of Ruby’s stock. If Bronze wants to avoid the nontaxable treatment associated with a § 332 liquidation (e.g., nonrecognition of loss), it could reduce its stock ownership in Ruby to below 80%.
Answer the following statement true (T) or false (F)