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IIA-CIA-Part2 Exam - Question 25

The following is an excerpt from an audit engagement workpaper:

✑ A Company

✑ Accounts Receivable

✑ Date

Objective. To determine if the computer system is correctly recording all accounts receivable transactions.

Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.

Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.

Which of the following is true regarding the workpaper?

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Correct Answer: C

The audit objective is to determine if the computer system is correctly recording all accounts receivable transactions. However, the audit procedure described involves the judgmental selection of a sample of accounts receivable balances greater than $50,000 for positive confirmation of balances. This approach does not comprehensively test all transactions and therefore does not align appropriately with the stated objective, which implies the need for more inclusive testing methods.

Discussion

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KCDUOption: C
Jan 11, 2021

I think this more aligns with the Objective vs. Procedure. The Objective says ALL A/R, whereas the procedure only call's for balances over $50K. This does not test for all, only those over $50K.

az_zu
Jul 23, 2020

How does the procedure not conform with the objectives?

MomenOmran
Aug 18, 2020

When you objective is to ensure that all what should have recorded is recorded, U follow tracing procedure, but what has mentioned in the question is a voucher technique

chung002
Nov 26, 2020

thanks for sharing. what is the correct audit procedure then for tracing ?

theJMG
Apr 11, 2021

In my opinion, it correct procedure should be tracing sampled transactions from customer invoices to accounts receivable records, and checking it these are accurately captured.

[Removed]
Nov 16, 2021

Objective relates to transactions. Procedures tested account balances

Mariecia
Jul 31, 2023

Confirmations test existence wherein tracing tests proper accounting/recording