An auditor is testing the completeness of the liability for claims and assessments. Which of the following procedures is MOST appropriate?

Answer options:

Confirming the claims with the insurance company.

Reviewing the minutes of the board of directors meetings.

Vouching recorded claims to the legal invoices.

Recalculating the estimated liability.

How to approach this question

Completeness of Litigation = Look for discussions of 'bad news'. Board Minutes, Legal Letters, Legal Expense accounts.

Full Answer

B.Reviewing the minutes of the board of directors meetings.✓ Correct

Reviewing the minutes of the board of directors meetings.

To identify unrecorded claims (completeness), the auditor reviews the minutes of meetings of those charged with governance, where such significant matters are discussed. The auditor also reviews legal expense accounts and sends letters of inquiry to counsel.

Common mistakes

Vouching (Existence) instead of Tracing/Scanning Minutes (Completeness).

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