ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which of the following is a typical audit test for completeness?

1. Confirmation with creditors

2. Cut-off testing

3. Matching invoices to receipts

4. Reviewing budget forecasts

The correct answer is: Cut-off testing

The selection of cut-off testing as a typical audit test for completeness is based on the objective of ensuring that all transactions that should be recognized in a accounting period are recorded. Completeness, in the context of financial statements, refers to ensuring that all transactions and balances that should be included in the financial records have indeed been included. Cut-off testing specifically helps auditors verify that transactions are recorded in the correct accounting period. By examining transactions that occur at the end of a reporting period, auditors can assess whether those transactions have been included in the correct period, thus addressing the risk of omissions. This is crucial for ensuring that income and expenses are recognized in the right time frame, which directly impacts the financial statements’ accuracy. While other options, such as confirmation with creditors or matching invoices to receipts, may serve important auditing roles, their primary focus is not on completeness. For instance, confirming with creditors relates more to verifying existence and accuracy of liabilities rather than ensuring that all liabilities have been recorded. Similarly, matching invoices to receipts is more related to accuracy and validity, providing assurance that the amounts recorded are indeed valid and supported by documentation. Reviewing budget forecasts does not pertain directly to completeness testing as it is more about future planning and does not provide evidence concerning