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)Perform analytical review analysis on the client's statement of financial position.
B)Send out confirmation requests to a sample of the client's debtors.
C)Trace transactions recorded close to year-end to source documentation.
D)None of the above.

Question

Quizplus · Accepted Answer

The best option in this scenario would be to trace transactions recorded close to year-end to source documentation. This will provide evidence of whether expenses that have been recorded as incurred before year-end have actually been paid and therefore included in the current year's expenses. Analytical review analysis of the statement of financial position may not provide specific information regarding expenses incurred before year-end, and sending out confirmation requests to debtors may not be relevant to this specific risk.

If Auditors Believe There Is a Risk That Expenses Incurred