Business, Legal & Accounting Glossary
Qualitative characteristic expected in financial statements.
SAS 31 states, “Assertions about completeness deal with whether all transactions and accounts that should be presented in the financial statements are so included.”. To support the completeness assertion, the auditor obtains sufficient, competent evidence that transactions that should be recorded have been recorded. The auditor’s consideration of materiality allows the auditor to support the statement that a sufficient number of transactions – enough to avoid a misstatement of consequence (which would lead to restatement – have been recorded. Testing to support the Completeness assertion originates with externally-generated source documents indicating that a transaction has occurred.
SAS 31 is dedicated to the topic of “evidential matter”. Thus, adherence to this auditing pronouncement requires that the auditor generate sufficient evidence that the records of transactions are complete – with no omissions or extra items whether fraudulent (see SAS 99) or non-intentional – at least to the point of not resulting material misstatements.
Audit procedures should proceed from the externally-generated source documents mentioned above. In the case of a client that is a retailer, an example of a source documents is an invoice from a vendor (supplier to the client) along with the receiving report that might be obtained from the warehouse supervisor. The invoice and receiving report are then traced to the journal, which should trace to the general ledger (GL). The GL entry will then flow into the correct line item in the financial statement, which in this case is Cost of goods sold in the income statement.
In testing Completeness, the auditor can set up audit procedures in several different ways.
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This glossary post was last updated: 18th April, 2020 | 484 Views.