CPA Exam — AUDPerforming Further Procedures and Obtaining EvidenceMedium
An auditor is performing tests of controls related to the client's payroll processing system. The auditor selects a sample of 50 payroll transactions and traces them from the time cards through to the payroll register and ultimately to the general ledger. Which assertion is the auditor primarily testing with this procedure?
- ACutoff.
- BValuation/Accuracy.
- CCompleteness.
- DExistence/Occurrence.
Show answer & explanationAnswer & explanation
Correct answer: C. Completeness.
Tracing from source documents (time cards) forward to the general ledger helps ensure that all valid transactions are recorded, thereby testing the completeness assertion.
Why the other options are wrong
- A. Cutoff relates to recording transactions in the correct accounting period.
- B. Accuracy would involve recalculating or comparing amounts, not just tracing the flow.
- D. Vouching from the general ledger back to source documents tests existence/occurrence.
Tracing for Completeness
An audit procedure that involves following a transaction or event from its origin (source document) through the accounting system to its final recording in the general ledger, primarily to test the completeness assertion.
- Starts with source documents (e.g., shipping documents, time cards).
- Follows the flow forward to the general ledger.
- Aims to ensure that all valid transactions are recorded.
Memory trick: TRACE for Completeness, VOUCH for Existence.