When testing the completeness assertion for a liability account, an auditor ordinarily works from the:
A)financial statements to the potentially unrecorded items.
B)potentially unrecorded items to the financial statements.
C)accounting records to the supporting evidence.
D)trial balance to the subsidiary ledger.

Question

Quizplus · Accepted Answer

When testing the completeness assertion for a liability account, the auditor should start from the potentially unrecorded items (like unrecorded liabilities) and trace them through to the financial statements. This approach ensures that all liabilities are recorded in the financial statements and that there are no material unrecorded liabilities. Starting from the financial statements and working backwards may miss liabilities that are not recorded in the accounting records. Therefore, the best choice is option B.

When Testing the Completeness Assertion for a Liability Account, an Auditor