An auditor is performing a search for unrecorded liabilities. Which of the following document populations should the auditor sample from?

Answer options:

Cash disbursements recorded BEFORE year-end.

Invoices received BEFORE year-end.

Cash disbursements recorded AFTER year-end.

Purchase orders issued AFTER year-end.

How to approach this question

Completeness of Liabilities = Look at subsequent payments. If you paid it in Jan, did you owe it in Dec?

Full Answer

C.Cash disbursements recorded AFTER year-end.✓ Correct

The primary procedure for detecting unrecorded liabilities is examining cash disbursements recorded subsequent to the balance sheet date to determine if the related liability existed at the balance sheet date.

Common mistakes

Looking at the year-end list (Existence) instead of the subsequent list (Completeness).

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