An auditor is testing the 'Presentation and Disclosure' assertion. Which of the following procedures is MOST relevant?

Answer options:

Vouching sales transactions to shipping documents.

Confirming accounts receivable balances.

Using a disclosure checklist to ensure all required disclosures are included in the notes.

Observing inventory.

How to approach this question

Disclosure = Checklist. Ensure GAAP requirements are met.

Full Answer

C.Using a disclosure checklist to ensure all required disclosures are included in the notes.✓ Correct

Auditors use standard disclosure checklists to verify that the financial statements contain all disclosures required by the applicable financial reporting framework (GAAP).

Common mistakes

Thinking substantive tests of balances cover disclosure.

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