If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:
A) Send out confirmation requests to a sample of the client's debtors
B) Trace transactions recorded close to year-end to source documentation
C) Perform analytical review analysis on the client's statement of financial position
D) None of the above

Question

Quizplus · Accepted Answer

As auditors are concerned about expenses incurred before year-end being excluded from the current year's expenses, they would trace transactions recorded close to year-end to source documentation as a substantive audit procedure to ensure completeness of expenses. Confirmation requests and analytical review analysis would not directly address the completeness risk.

If Auditors Believe There Is a Risk That Expenses Incurred