ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which of the following tests is primarily concerned with the verification of transactions occurring?

1. Accuracy

2. Classification

3. Occurrence

4. Existence

The correct answer is: Occurrence

The focus of the test concerned with the verification of transactions largely relates to the concept of occurrence. This test ensures that transactions being recorded in the financial statements actually took place. In other words, it seeks to confirm that the events described in the financial records are real transactions that occurred during the reporting period. When assessing the occurrence of transactions, auditors are primarily interested in confirming that all recorded transactions happened as stated. This might involve examining documentation, such as invoices, receipts, or contracts, to establish that the transactions were not only authorized but also genuinely executed. In contrast, the other options revolve around different aspects of the audit process. For instance, accuracy pertains to whether the amounts and details of transactions have been recorded correctly as per the applicable financial reporting framework. Classification relates to ensuring that transactions have been recorded in the correct accounts, while existence generally verifies whether assets, liabilities, and equity items recorded actually exist at the reporting date. These concepts, while integral to the overall assessment of the financial statements, do not specifically focus on the verification of whether transactions occurred as required by the question.