How can the audit team confirm completeness of accounts payable?
The primary test to confirm the completeness assertion for accounts payable and other liabilities is to perform a “search for unrecorded liabilities”. Basically, the audit team obtains a listing of all cash disbursements made for a period of time after year-end.
The audit team then requests the invoice for the cash disbursement and determines if the invoice was properly included or properly excluded from the accounts payable balance at year-end.
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How to test the completeness assertion for expenses?
The primary concern for expenses is that the company has not recorded all expenses in the financial statements. By not recording certain expenses, the company can inflate profit. The audit team can trace invoices or cash disbursements to the general ledger (i.e. the search for unrecorded liabilities).