Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?
A)Examine confirmation requests returned by creditors whose accounts are on a subsidiary trial balance of accounts payable.
B)Examine a sample of cash disbursements in the period subsequent to year-end.
C)Examine a sample of invoices a few days prior to and subsequent to year-end to ascertain whether they have been properly recorded.
D)Examine unusual relationships between monthly accounts payable and recorded purchases.

Question

Quizplus · Accepted Answer

Examining a sample of cash disbursements in the period subsequent to year-end is the best audit procedure for determining the existence of unrecorded liabilities. This is because payments made after year-end may be related to liabilities that existed at the balance sheet date but were not recorded. By examining these payments, the auditor can identify any previously unrecorded liabilities. The other options do not specifically target unrecorded liabilities and are not as effective in identifying them.

Which of the Following Is the Best Audit Procedure for Determining