Why Will an Auditor More Extensively Test Controls for the Completeness

question 47

Multiple Choice

Why will an auditor more extensively test controls for the completeness assertion on liability accounts than on asset accounts?

• A) The risk of unrecorded liabilities is greater than the risk of unrecorded assets.
• B) The completeness assertion is not applicable to asset accounts.
• C) The liabilities account balances presented in the financial statements tend to be more complete than the asset accounts.
• D) The most likely type of misstatement for liabilities is overstatements.

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Definitions:

Total Costs

The complete aggregate of expenses incurred by a business, encompassing both fixed and variable costs.

Differential Revenue

The difference in revenue between two alternative decisions or scenarios.

Course of Action

A plan or strategy designed to achieve a specific goal or solve a problem.

Differential Cost

The difference in total cost between two alternative decisions or scenarios.