ExpertHard2 marksMultiple Choice
ACCA · Question 15 · Syllabus C: Business functions, regulation and technology
Section A
An internal auditor at ShopSphere, an e-commerce platform, selects a sample of sales invoices from the accounting ledger and works backward to locate the original customer order and shipping dispatch notes. What is the primary purpose of this specific audit procedure?
Section A
An internal auditor at ShopSphere, an e-commerce platform, selects a sample of sales invoices from the accounting ledger and works backward to locate the original customer order and shipping dispatch notes. What is the primary purpose of this specific audit procedure?
Answer options:
A.
To ensure completeness, proving that all shipped goods were actually invoiced.
B.
To verify the occurrence and validity of the recorded sales.
C.
To check the mathematical accuracy of the ledger totals.
D.
To confirm the physical existence of inventory in the warehouse.
How to approach this question
Recognize the direction of the test: Ledger -> Source Document. This is called 'vouching' and it tests for overstatement/occurrence (did this recorded sale actually happen?).
Full Answer
B.To verify the occurrence and validity of the recorded sales.✓ Correct
This procedure is known as 'vouching'. By taking a recorded figure in the ledger and finding the supporting source documents (order, shipping note), the auditor is verifying that the sale actually occurred and is valid. If they started with shipping notes and looked for the invoice (tracing), they would be testing for completeness.
Common mistakes
Confusing 'vouching' (testing occurrence) with 'tracing' (testing completeness). Direction matters: Ledger to Source = Occurrence. Source to Ledger = Completeness.
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