Area III: Performing Procedures — CPA Practice Question 30

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Completeness direction: Outside World -> Client Books. Find a list of all dividends that *should* exist (Standard & Poor's, etc.) and check if they are in the books.

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B.Reviewing dividend record books produced by investment advisory services (e.g., electronic databases) to identify dividends declared on securities held.✓ Correct

To test completeness of dividend income, the auditor needs to identify what *should* have been recorded. Using an independent source (like a dividend database) to determine declared dividends and tracing them to the client's books is the best procedure.

Common mistakes

Vouching (Books -> Source) instead of Tracing (Source -> Books) for completeness.

An auditor is testing the completeness of the dividend income account for a nonissuer investor. Which of the following audit procedures is MOST effective?

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Practice the full CPA AUD Practice Exam 3

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