ExpertHard1 markMultiple Choice
CPA · Question 52 · Area 3: Performing Procedures
An auditor is testing the 'Rights and Obligations' assertion for accounts payable. Which procedure is most relevant?
An auditor is testing the 'Rights and Obligations' assertion for accounts payable. Which procedure is most relevant?
Answer options:
A.
Vouching a sample of recorded payables to vendor invoices.
B.
Reviewing the voucher register and supporting documents for indications of consignment or non-liability.
C.
Tracing receiving reports to the accounts payable listing.
D.
Recalculating the interest on overdue payables.
How to approach this question
Obligation = Do I owe it? Look for terms that say 'You don't owe this'.
Full Answer
B.Reviewing the voucher register and supporting documents for indications of consignment or non-liability.✓ Correct
Reviewing supporting documents ensures that the liability is a legal obligation of the entity and not, for example, a consignment arrangement where payment is not yet due.
Common mistakes
Confusing Existence (is it there?) with Obligations (do I owe it?).
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