An internal audit activity is participating in the due diligence work for an acquisition that a company is considering. One engagement objective is to determine if the acquisition's accounts payable contain all outstanding liabilities. Which of the following audit procedures would not be relevant for this objective?
The objective is to determine the completeness of accounts payable, meaning assessing whether all outstanding liabilities have been recorded. Option C, which involves selecting a sample of accounts payable from the accounts payable list and verifying the supporting receiving reports, purchase orders, and invoices, primarily addresses the existence of accounts payable rather than their completeness. It ensures that recorded accounts payable are supported by documentation but does not ensure that all liabilities have been recorded. The other procedures are more relevant for assessing completeness by either verifying liabilities not necessarily recorded yet (e.g. subsequent cash disbursements) or by tracing unrecorded liabilities (e.g. confirmations and tracing receiving reports).
The objective was to determine the completeness of accounts payable - C test objective will achieve the existence of accounts payable.
Yes, it's vouching. But is a sample enough to make a statement about completeness?